M Long - SOC 315 Week 3 Questions

M Long - SOC 315 Week 3 Questions - Maggie (Margaret) Long...

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Maggie (Margaret) Long Ragonesi SOC 315-41 June 15, 2010 Week 3 Questions 11. Network effect: Software. There are very strong network effects operating in the market for widely used computer software. Explain, and give some examples of this dynamic. E.g., would Microsoft be a good example-why? “In economics and business, a network effect (also called network externality) is the effect that one user of a good or service has on the value of that product to other people.” The value of a product or services will increase as more people use it if a network effect is present (Network Effect, 2010). There are very strong network effects operating in the market for widely used computer software where compatibility is paramount. Users of computer software need to know that the products of that software can be accessed by others. Also, users want to be sure that the time invested in learning software will have value to potential employers or future projects. Deprecated programming languages such as COBAL and FORTRAN are rarely studied or taught because they are rarely used in modern software development. Microsoft is an excellent example of the importance of the network effect. The most publicized advantage of the Windows operating system is that it is compatible with more hardware and software than its competitors such as Macintosh, Linux or FreeBSD. This compatibility is a result of the network effect: because of Windows large market share, hardware and software manufacturers must create products that are compatible and because of the large number of compatible products, Windows regains greater market share. The large number of Windows users adds value to the product (Network Effect, 2010). 12.
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This note was uploaded on 07/24/2010 for the course SOC 315 taught by Professor Ragonesi during the Spring '10 term at CSU Dominguez Hills.

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M Long - SOC 315 Week 3 Questions - Maggie (Margaret) Long...

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