I don't agree with this being an "oft-overlooked" method - this seems to be the no. 1 strategy every tech startup is trying to do these days.
Which is why I now need an account to play games or work with photoshop, why we have "smart" light-switches that need to talk to their platform to turn on the light half a meter away and why there are half a dozen isolated messenger services instead of a single federated protocol (not even starting with "smart home" systems).
However the article is a good summary of all the reasons that will cause companies to pursue network effects and the signs you can watch out for to spot them.
I think most of these companies are missing the exponential increase in value for users. And most seem to bundle a lot of other crap with their network effected product which probably dilutes its value even more.
Sounds like your typical Microsoft (Embrace, Extend, Extinguish by having majority) and Facebook approach. Neither novel nor easy to pull off.
Of course an opponent with stronger budget and marketing doing the same thing reaaonably well will extinguish or coopt you network. Or buy you off (which might be the desired game plan).
Users then end up paying for suddenly disappearing or closed of network.
I'm not seeing it. Fast seconds are a thing, and will come in and take your lunch money.
I'm also not entirely sure how it connects to "defensible" software. The ability to set a standard so that you're able to build that audience that you need for a network effect to kick in is difficult, and is typically rare. It might serve well in a small niche market, but you'll be unlikely to expand past that market with out getting scooped by one of the bigger competitors.
I'm curious to learn how it's supposed to offer protection in the current environment.
I agree with the sentiment of this article. I think the focus should certainly be on the network effects of offering superior value to users. Doing some seems to do really well at creating a self-building network.
The network effects could be on the business user side too. Word, javascript, photoshop, etc. Are you trained in XYZ skill? You need to be to work in this industry.
[+] [-] xg15|8 years ago|reply
Which is why I now need an account to play games or work with photoshop, why we have "smart" light-switches that need to talk to their platform to turn on the light half a meter away and why there are half a dozen isolated messenger services instead of a single federated protocol (not even starting with "smart home" systems).
However the article is a good summary of all the reasons that will cause companies to pursue network effects and the signs you can watch out for to spot them.
[+] [-] sharemywin|8 years ago|reply
[+] [-] AstralStorm|8 years ago|reply
Of course an opponent with stronger budget and marketing doing the same thing reaaonably well will extinguish or coopt you network. Or buy you off (which might be the desired game plan).
Users then end up paying for suddenly disappearing or closed of network.
[+] [-] sharemywin|8 years ago|reply
[+] [-] DrImplausible|8 years ago|reply
I'm also not entirely sure how it connects to "defensible" software. The ability to set a standard so that you're able to build that audience that you need for a network effect to kick in is difficult, and is typically rare. It might serve well in a small niche market, but you'll be unlikely to expand past that market with out getting scooped by one of the bigger competitors.
I'm curious to learn how it's supposed to offer protection in the current environment.
[+] [-] gabriel_kent|8 years ago|reply
[+] [-] sharemywin|8 years ago|reply
[+] [-] oldmancoyote|8 years ago|reply