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Unformatted text preview: that makes the netwo rk ef f ect even stro nger. When
users exchanging inf o rmatio n attract mo re users, they can also attract f irms o f f ering
co mplementary pro ducts. When develo pers o f co mplementary pro ducts invest time writing
so f tware—and users install, learn, and custo mize these pro ducts—switching co sts are created that
enhance the staying po w er o f a given netwo rk. Fro m a strategist’s perspective this can be great
news f o r do minant f irms in markets where netwo rk ef f ects exist. The larger yo ur netwo rk, the
mo re dif f icult it beco mes f o r rivals to challenge yo ur leadership po sitio n. K E Y TAK E AWAYS
Products and services subject to network effects get their value from exchange, perceived
staying power, and complementary products and services. Tech firms and services that gain the
lead in these categories often dominate all rivals.
Many firms attempt to enhance their network effects by creating a platform for the
development of third‐party products and servic...
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- Winter '14