Exam 8: Understanding Network Effects: Strategies for Competing in a Platform-Centric, Winner-Take-All World

Which of the following is an example of a measure taken by a firm to encourage the development of complementary goods?

Mobile software developers often find iOS more attractive than the Android operating system, because Android runs on many more types devices than iOS and the Android operating system is fragmented into differnet versions, each combination of which needs to be tested.

High switching costs serve to weaken the value of network effects as a value asset.

Every product or service subject to network effects fosters some kind of exchange.

Apple, which controls over 75 percent of digital music sales, was able to dictate song pricing for years, despite the tremendous protests of the record labels. This implies that:

A market dominated by a small number of powerful sellers is known as a(n) _____ .

While Sony and Microsoft focused on the graphics and raw processing power favored by -core male gamers, Nintendo chose to develop a machine to appeal to families, women, and age groups that normally shunned violent games. The strategy adopted by Nintendo in this example is the _____ strategy.

Distinguish between one-sided and two-sided markets. Provide examples for each and mention the benefits derived from these markets.

Cisco purchased Pure Digital, maker of the Flip video recorder, but ended up shutting the unit down a little over two years later. The reason for Cisco's failure was:

Adobe gives away the Acrobat Reader to build a market for the sale of software that creates Acrobat files. This is an example of:

Regional anti-trust authorities may consider product bundling by dominant firms to be anticompetitive.

In the absence of network effects, the value of a product or service increases as the number of users grows.

Staying power refers to the:

In the context of network effects, the term "network" refers to either wired or wireless systems that connect computing components.

A firm can spend no money and time, yet expect to enhance its offerings, by:

If a firm's claim in the blue ocean is based on easily _____ resources (like technology features), then holding off rivals will be tougher.

Viral promotion involves:

eBay dominated worldwide markets for auctions. Yahoo entered the Japanese online auction market just five months before eBay, yet eBay never matched Yahoo's lead and it eventually pulled out of the Japanese market, ceding a multi-billion dollar market to its rival. Why didn't the network effects-derived value from eBay's other markets help it in Japan?

Firms that constantly innovate do so to develop open standards for competitors to become compatible.

Staying power is important for consumers of technology products because investment over time usually greatly exceeds the initial price paid for a product or service