ISYS1021 Lecture Notes - Lecture 13: Hd Dvd, Network Effect, Apple Inc.
Document Summary
Network effects exist everywhere, not just the internet. Please provide an example of a technology that is not software or internet related, but which exhibits network effects. An example of network effects that is not software or internet related is the first telephones. These exhibited network effects in that as more people bought telephones, the more value the technology gained. Each new user means that one more person can be contacting at any time, and all of these users add up to a network of telephone users. The telephone has the three sources of value that contribute to strong network effects in that people can communicate through it (exchange), it has long-term viability, and the cell phone was the telephone"s largest complementary benefit. The telephone is a one-sided market that the users are all of one class in that they are all communicating, and the telephone reaps same-side exchange benefits.