Tipping The Balance: Indirect Network Effects And Market Concentration

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Executive Summary

The article focuses on market values of high-tech products, market concentration and network effects on different IT products. The actual and expected software availability narrows down to a deliberation between high-definition formats and otherwise. The dueling formats have put customers on the fence and now it has become imperative for companies to rival to a point of determining a clear winner. Around the world, high-technology markets are resorting to the indirect and direct network effect that largely determines the success of computer operating systems. This ahs in turn resulted in a series of reactions not only from the developers of software but also consumers and hardware manufacturers. This has made the modern consumer sit back and view the competition impersonally to save a few dollars more. Initial advantages, indirect networking and the tipping phenomenon all unleash rivalry and tricky to measure market concentration. There are a number of dedicated researchers now working on specially designed modeling techniques to analyze hardware and software market successes and failures. It is interesting to note that beliefs of the target audiences play a pivotal role in the concept of future evolution and determination of the market winner. The market for gadgets that allow consumers to watch movies downloaded from the internet on a television set can be used to illustrate how indirect network effects lead to tipping.

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