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Unformatted text preview: to kno w if netwo rk ef f ects exist, ho w stro ng
they might be, where they co me f ro m, and ho w they might be harnessed to yo ur benef it. Here’s a
quick rundo wn o f the to o ls at yo ur dispo sal when co mpeting in the presence o f netwo rk ef f ects. Strategies for Competing in Markets with Network Effects
(Examples in Parentheses)
Mo ve early (Yaho o ! Auctio ns in Japan)
Subsidize pro duct ado ptio n (P ayP al)
Leverage viral pro mo tio n (Skype; Facebo o k f eeds)
Expand by redef ining the market to bring in new catego ries o f users (Nintendo Wii) o r
thro ugh co nvergence (iP ho ne).
Fo rm alliances and partnerships (NYCE vs. Citibank)
Establish distributio n channels (Java with Netscape; Micro so f t bundling Media P layer with
Seed the market with co mplements (Blu-ray; Nintendo )
Enco urage the develo pment o f co mplementary go o ds—this can include o f f ering reso urces,
subsidies, reduced f ees, market research, develo pment kits, venture capital (Facebo o k
Maintain backward co mpat...
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- Winter '14