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Unformatted text preview: pring 2003. Is This Good for Innovation?
Critics o f f irms that leverage pro prietary standards f o r market do minance o f ten co mplain that
netwo rk ef f ects are bad f o r inno vatio n. But this statement isn’t entirely true. While netwo rk
ef f ects limit co mpetitio n against the do minant standard, inno vatio n w ithin a standard may
actually blo sso m. Co nsider Windo ws. Micro so f t has a huge advantage in the deskto p o perating
system market, so f ew rivals try to co mpete with it. Apple’s Mac OS and the o pen so urce Linux
o perating system are the f irm’s o nly credible rivals, and bo th have tiny market shares. But the
do minance o f Windo ws is a magnet f o r develo pers to inno vate within the standard.
P ro grammers with no vel ideas are willing to make the investment in learning to write so f tware
f o r Windo ws because they’re sure that a Windo ws versio n can be used by the o verwhelming
majo rity o f co mputer users. By co ntrast, lo o k at the mess we initially had in the mo bile pho ne market. With so many
dif f eren...
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- Winter '14