BU111 Lecture Notes - Lecture 11: Complementary Good, Customer Switching, Switching Barriers
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Blu-ray vs. (hd) dvd (both were commercially available in 2007. No one knows who"s going to emerge as the winner. A lot of people supporting hd but shift their alliances and supported blu-ray (warner brothers). ) *sony put a blu-ray player into the ps3 which got it into homes quickly. Installed base - # of users : bigger = greater influence. (doesn"t matter if your product/software is better, it depends on who can get more exposure) Lock-in size of investment: larger greater resistance to switch. (hagarty"s family is locked-in to the wii system ) Switching costs- cost of moving: entry barrier; makes lock-in worse (when you switch from the wii to the xbox you need to buy new games, controllers, etc these are switching costs) Complementary goods needed for value; creates vicious or virtuous cycle. Console is a good games are complementary goods. Virtuous cycle: lots of good high quality complementary goods, it makes your product look better.
