network effect


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network effect

The resulting increased value of a product because more and more people use it. Telephones, fax machines, computer operating systems and smartphones have been prime examples. A product's success is more about compatibility and less about its superiority to the competition. For example, Microsoft became hugely successful due to the network effect, because more and more people bought Windows PCs, and developers began to write programs for Windows only or at least much earlier than for the Mac version. In contrast, owing to the network effect, the company has also suffered, because although Nokia Windows Phones are excellent devices, they have a tiny market share compared to iPhone and Android, and fewer developers create apps for Windows Phones as a result. See tipping point and network externality.
References in periodicals archive ?
Consequently, the user base of the application was too small, which hampered its cross-sided network effect based growth and the power of the platform silo.
The impact of a network effect ends precisely where the need for compatibility ends.
If you're interested in seeing the results of the Network Effect in corporate responsibility, or want to leverage the power of networks for your own corporate initiatives, join us Oct.
Again, we are focused on the overall network effect and not specific targets, be they positive actors whom we should reinforce or insurgents who should be removed from the network.
The authors noted that in the most recent survey, 39% of developers said that the network effect of all of Google's assets like search and Android "are more important to them than Facebook's social graph.
the weakening of the Swiss income effect and of the network effect may
On the other hand, the firm will be able to appropriate some of the surplus generated by the network effect itself, which is present for any standard and thus does not affect the social incentive to change standards.
The relationship is complicated by its theoretical ambiguity: religion can both enhance and suppress economic activity in general, and its potential network effect can both create and divert trade.
Given that any standard conveys a network effect on the demand side, the industry can choose any standard or not choose among them (as happened for quite a while in the late 19 80s with LPs and CDs coexisting in the music market).
By enabling the utilization of video conferencing beyond the business boundaries and making B2B video conferencing as accessible and easy to use as audio conferencing, VidyoWay will drive rapid market growth through a network effect created by increased usage that will complement and accelerate VidyoConferencing platform sales.
Among their topics are scale economies and the network effect in Internet retailing, supply chain management for a virtual world, outsourcing Internet retail operations, and managing product returns.
The network effect consists of the fact that the utility from purchasing equipment characterized by a given standard is positively related to the number of consumers who purchase a compatible equipment, for two reasons.

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