The Network Effect Essay

The Network Effect Essay

Length: 1958 words (5.6 double-spaced pages)

Rating: Strong Essays

Open Document

Essay Preview

Some products generate value only when they are combined with others, otherwise they have small or no value at all in isolation (Katz and Shapiro, 1994, p. 93). This is so called network effect – the fact that higher consumption of specific products makes them more valuable (Sundararajan, 2003, p.1). Another scientist Leibenstein, calls this effect as “bandwagon effect”- “the extent to which the demand for a commodity is increased due to the fact that others are also consuming the same commodity” (Besen, 1999, p.1). The economical base of network effects has received a huge attention, since it appears to be important in understanding the key features of modern high-tech industries (Bresnaham, 2001, p.2). Transportation systems, telecommunication systems, etc. exhibit network externalities, especially the IT market (Lee and O’Connor, 2003, p. 242). Operating systems of computers and compatible software are some of the examples of products experiencing network effects. Users prefer to have an operating system on which they will be able to install a large number of applications (Fisher, 2000, p.181).

The purpose of this paper is to understand the how the network effects of Microsoft’s products contributed to its rise and dominance in the market. In order to answer this question, the following points should be explained and analyzed. First of all, the environment of network industries in which Microsoft operates must be discussed. Moreover, such terms as “critical mass” and the way it is generated; “tipping points” and their impact on the products’ future, etc. should be described. Furthermore, the strategies and tactics, which are used by Microsoft to keep its positions in the market, should be outlined.

The reminder of this ...

... middle of paper ...

...uct (Economides, 1998). Also, Microsoft bundled Internet Explorer to its operating system, aiming to create a similar installed base for IE so that it would create an entry barrier to rival browsers. They moved the entry of competitors. More over, it is important to mention that a “firm like Netscape has less incentive to develop and write software applications if Microsoft can develop its own version of these software applications and bundle them with Windows” (Clements, 2002, 13).

The technical development of the Ethernet technologies also helped Microsoft. According to the With Paper, several millions were invested in intra-net networks, into servers, working networks etc. That made Microsoft first company whose products were able to operate in huge networks. This in turn, attracted large organizations and government institutions to Microsoft’s product.

Need Writing Help?

Get feedback on grammar, clarity, concision and logic instantly.

Check your paper »

Essay on The CNN Effect

- The CNN Effect has been described in many positive and negative ways. Former UN Security General Boutros-Ghali described CNN as “the sixteenth member of the Security Council (Gilboa, 2005).” While Colin Powell saw the network’s effect as being that “live television coverage doesn’t change the policy, but it does create the environment in which policy is made (Gilboa, 2005).” These two statements show that the CNN Effect has an impact both domestically and internationally as a major part of the world’s political process....   [tags: Media, Network, Television]

Strong Essays
2897 words (8.3 pages)

Cloud and Its Effect on Businesses Essay

- The cloud is drastically changing the way we create, manage, and store networks and resources by hosting services on the cloud; and an IT professional will need to know how they are changing the industry and what the models have to offer. Each type of model (public, private, and hybrid) will come with varying prices and security concerns which will need to be weighed to determine which cloud model would be the best for the network. Once choosing the proper implementation for the cloud a service will need to be chosen, IaaS, PaaS, and SaaS....   [tags: services, model, data, network]

Strong Essays
2300 words (6.6 pages)

Network Design Essay

- Network Design Table of Contents Introduction 3 Mesh 3 Bus 4 Ring 4 Star 5 Ethernet 6 Token Ring 6 Fiber Distributed Data Interface (FDDI) 7 Wireless 7 Reference List 8 Introduction This paper is an overview of some aspects of network architecture. Network architecture is defined as the communication products and services that ensure the various components can work together. I will discuss the different physical LAN topologies and how they work. Lastly, I will discuss several of the LAN Standards such as Ethernet and Token Ring....   [tags: Network Technology]

Strong Essays
1267 words (3.6 pages)

Multiple Access Relay Network Essay

- We consider a multiple access relay network where each source transmit channel coded packets, relay decode the transmitted packet, generate network coded parity symbol, and retransmit it. We assume the relay has multiple antennas, so relay to destination link is MIMO channel. We consider two MIMO transmission mode at the relay, spatial multiplexing (SM) and beamforming as transmit diversity (TD), and assume that the relay use different network coding scheme depending on the MIMO transmission mode....   [tags: Technology, Network]

Free Essays
654 words (1.9 pages)

Online Support Network (OSN) for K-12 Students Essay

- This proposed quantitative, pre-experimental study evaluates best practices” to facilitate the advancement of technology for K–12 students aligned to cross curriculum strategies and activities through developing an online support network (OSN). Designing a teacher professional learning through curriculum integration strategies would precede wireless laptop classroom integration, create access for educators to share and plan new academic tasks collaboratively (Oliver, 2010). For instance, a study on OSN conducted by Stewart, Bachman and Babb (2009) promoted online teacher training technology through social constructivism (SC)....   [tags: Education, Technology, Online Network]

Strong Essays
2126 words (6.1 pages)

Essay on Network Operating Systems (NOS)

- ... The first type of network operating system is peer to peer. The operating system for a peer to peer network allows the users within the network to access files contained in their computers as well as shared files on other computers. “You can configure computers in peer to peer workgroups to allow sharing of files, printers and other resources across all of the devices. Peer networks allow data to be shared easily in both directions, whether for downloads to your computer or uploads from your computer” [3]....   [tags: hardware, software, types, peer, client]

Strong Essays
834 words (2.4 pages)

IPSec and Network Security Essay

- IPSec is a framework which utilizes a set of IETF protocols to offer end-to-end IP security using strong encryption, public and private key pair cryptography. IPSec secures communication links that could experience network security issues like corruption, eavesdropping, misused data etc (Pezeshki et al 2007) when not secured. However, using IPSec tends to also have an adverse effect on router utilization and overall network performance. One of the major issues with IPSec is performance degradation and throughput (Berger, 2006) which goes back to the complex authentication and encapsulation techniques....   [tags: Internet Security]

Strong Essays
653 words (1.9 pages)

Sensor Network Design Essay examples

- The procedure used to determine the type of instrument and mechanism used to measure various required variables is called sensor network design. This problem has been addressed by several researchers [65]. As the design of a sensor network for GTNs is not the main concern of this work, we develop here some heuristic rules for sensor placement from the accuracy point of view. To study the effect of different measurements, two cases are distinguished: redundant and non-redundant cases. In the non-redundant case, noise corrupted measurements of pressure and temperature, or mass flow and temperature are provided as inputs in our approach, and the flows, pressures and temperatures are estimated i...   [tags: redundant and non-redundant cases]

Free Essays
805 words (2.3 pages)

Manorial Trade Network, the Indian Ocean Trade Network, and the Trans-Saharan Trade Network

- Comparing and Contrasting the Manorial Trade Network, the Indian Ocean Trade Network, and the Trans-Saharan Trade Network The creation of a strong and productive society depends on a stable economy. The development of extensive trade relations in Africa, Europe, and Asia, was necessary for the existence of the highly advanced civilizations that exist today. The Trans-Saharan trade, Indian Ocean trade, and manorial trade of Europe in the middle ages were major trading networks that flourished. The Trans-Saharan trade network connected the Mediterranean countries and Northern African countries with Sub-Saharan Africa....   [tags: economy, commerce, slave]

Strong Essays
854 words (2.4 pages)

Essay about The Effect of Technology on Organizations

- The Effect of Technology on Organizations Staying abreast to technology changes had been a primary focus of my job up until this past Monday. For nearly seven years I worked for a retailer selling Verizon Wireless phones and service plans. This past Monday, I made a career change and began working as a Home Mortgage Consultant for Wells Fargo. The focus of this paper will be on my experiences while working as a manager for Verizon Wireless. In August of 1999, I started my career with a company called Bell Atlantic that shortly thereafter became Verizon Wireless....   [tags: Cause Effect Technology Business]

Strong Essays
1189 words (3.4 pages)