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

A market is said to be _____ if it derives most of its value from a single class of users.

While Sony and Microsoft focused on the graphics and raw processing power favored by hard-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.

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

In a market influenced by network effects, the winning product or service is often determined by its technical superiority, with technically strong newcommers able to unseat the dominant incumbents.

___________ allows iOS to control home products including locks, lighting, and thermostats.

Moving first plays a significant role in markets influenced by network effects.

Worldwide auction leader eBay started operations in Japan just five months after Yahoo! launched its Japanese auction service. But eBay was never able to mount a credible threat and ended up pulling out of the market. This example shows that:

Uber and PayPal used similar strategies when trying to jumpstart network effects that were vital in creating their dominance. What did each do?

You are at a packed stadium for the big game and you want to upload a photo of your team's touchdown using Instagram. Your mobile phone shows five bars of service, but you still can't access the Internet. This is likely an example of ______.

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

A market where there are many buyers but only one dominant seller is known as a(n) _____.

Metcalfe's Law is also known as:

The rise of social media has made _____ promotion a tool that many firms can exploit.

Network effects do not influence all consumer products or services.

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:

The ability to take advantage of complementary products developed for a prior generation of technology is known as _____.

_____ involves competing by offering a new technology that is so superior to existing offerings that the value overcomes the total resistance that older technologies might enjoy via exchange, switching cost, and complementary benefits.

Which statement best describes the relationship between network effects and innovation?

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

The phenomenon of ________________________________________ exists when increasing numbers of users lower the value of a product or service