Chapter 1: Network Effects Flashcards Preview

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Flashcards in Chapter 1: Network Effects Deck (7)
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What are three values from network effects?

1. Exchange
2. Staying in power
3. Complementary benefits


What are one sided markets and same-side exchange benefits?

1. Most value from singe class of users

2. Benefits derived by interaction among members of a single class


What are two-sided markets and cross-side exchange benefits?

1. Two distinct categories of participants, both of which are need to deliver value

2. When the rise of one user of the market causes rise in the second user


Is network effects bad for innovation?

Can limit competition against dominant standard, but innovation within standard can blossom


What is "seed the market" strategy?

In a two sided market, firms can change the ones who are willing to pay


What is the "leverage backward compatibility" strategy?

Ability to take advantage of complimentary products develop for a prior generation of technology


What is the "pre-announcement" strategy?

Announcing future product to delay purchasing decisions.

The Osborne Effect: A firm pre-announcing a product or service and experiencing a share drop in sales of current offerings as user wait