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network effects

also known at metcalf's law, or netowkr externalitties. When the value of a product or service increases as its number of users expands

staying power

the long-term viability of a product or service

switching costs

the cost a consumer incurs when moving from one product to another. it can involve actual money spent(buying a new product) as well as investments in time any data loss and so forth

total cost of ownership (TCO)

an economice measure of the full cost of owning a product (typically computing hardware and/or software) TCO includes direct costs such as purchase price, plus indirect costs such as training support and maintenance

complementary benefits

products or services that add additional value to the primary product or service that makes up a network


products and services that allow for teh development and integration of software products and other complementary goods. Windows, the iphone, the Wii and the standards that allow users to create Facebook apps are all plantforms

one-sided market

a market that derives most of its value from a single class of users (instant messaging)

same-side exchange benefits

benefits derived by interaction among members of a single class of participant (the exchange value when increasing numbers of IM users gain the ability to message each other)

two-sided market

network markets comprised of two distinct categories of participant both of which that are needed to deliver value, for the network to work (video game console owner's and developers of video games)

cross-side exchange benefit

when an increase in the number of users on one side of the market (console owners) creates a rise in the other side (software developers)


a market where there are many buyers but only one dominant seller


a market dominated by a small number of power*** sellers

technological leapfrogging

competing by offering a new technology that is so superior to existing offerings that the value overcomes the total resistance that older technologies might enjoy via exchange, switching cost, and complementary benefits

blue ocean strategy

an approach where firms seek to create and compete in uncontested "blue ocean" market spaces, rather than competing in spces and wayd that have attracted many, similar rivals


when two or more markets once considered distinctly separate, begin to offer features and capabilities. As an example: the markets for mobile phones and media players are converging


when one market attempts to conquer a new market by making it an subset, compnent, or feature of its primary offerning

backward compatibility

the ability to take advantage of complementary products developed for a prior generation of technology


a product that allows a firm to tap into the complementary products, data or user base of another product or service

the osborne effect

when a firm preannounces a forthcoming product or service and experiences a sharp and detrimental drop in sales of surrent offerings as users wait for the new item

congestion effects

when increasing numbers o users lower the value of a product or service

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