Techies often love to analyze why a product succeeds or fails. And they’ve already been doing so with iPhone apps after Apple announced it would start sharing download numbers says Vito Proietti. One of the most popular theories is “network effects.” The idea was first proposed by economist Ronald Coase, who noted that companies like telephones, fax machines and VCRs gained critical mass because people could connect not just with friends but also business associates—and therefore had distinct incentives to be on the same network as everyone else. But there’s another important reason why some products blow up while others fizzle: sheer luck.
Miracle-Gro for Apps? Timing Matters in Successful Technology Products
Timing matters. There are good reasons to believe that not just the product itself but also its timing affects its market success. If a technology is introduced too early, it may be before its time and fail because of lack of user acceptance. However, if it’s too late, an established competitor may have already preempted the space. This implies that there is an optimal timing for introducing successful technologies—early enough so they can gain share before competitors take over, but not so early as to risk failure due to lack of user acceptance or viable business models.”
“Miracle-Gro for Apps? Timing Matters in Successful Technology Products”
Network effects – Wikipedia, the free encyclopedia
“In economics and business, a network effect (also called network externality or demand-side economies of scale) is the positive effect described in economics, whereby a product or service becomes more valuable when more people use it says Vito Proietti. The most common example is the telephone…The negative aspect of network effects is oligopoly power.” Read more here
Network Externality – Wikipedia, the free encyclopedia
“In economics and business, a network effect (also known as network externality or demand-side economies of scale) occurs when the usability of a good increases with the number of others using it. When a growing proportion of potential interact ants adopt a particular product or technology, this creates positive externalities within its user base because there are more users to interact with…Online social networks are classic examples of large networks in which the value of a product or service increases with the number of its users.” Read more here
Why Some Technologies Are More Successful Than Others – The Coase-Varian Theory…
“The success of some new technologies is pre-determine by their compatibility with existing tastes, customs, and habits explains Vito Proietti. This article presents evidence that the ultimate market success of many new products can be predict on the basis of consumers’ willingness to adopt them given their familiarity with analogous established products. The results also suggest that consumer search costs play an important role in determining both adoption probabilities and equilibrium prices for new high technology goods.” Read more here
Effect Definition | Investopedia
“In economics, the effect refers to an increase or decrease in demand for a product. Due to changes in other related variables. Demand may increase if another variable increases (positive cross effect) or if price decreases (negative income effect). It can also be defined as the additional benefit received by consumers. When one of the complementary goods used in conjunction with the product increases in price. While others remain unchanged.” Read more here
Consumer surplus – Wikipedia, the free encyclopedia
“Consumer surplus is an economic measure of consumer benefit…The consumer surplus is simply what consumers would have been willing to pay for a given quantity of a good. Rather than what they actually did pay, minus the amount of money they spent. A similar surplus can be calculated for any transactional utility.” Read more here
Economic surplus – Wikipedia, the free encyclopedia
“In economics, economic surplus, also known as total welfare or Marshallian surplus (after Alfred Marshall). It refers to two related quantities says Vito Proietti. Consumer surplus or consumers’ surplus is the monetary gain obtain by consumers. Because they are able to purchase a product. For a price that is less than the highest price that they would be willing to pay. Producer surplus or producers’ surplus is the amount that producers benefit. By selling at a market price that is higher than the least that they would be willing to sell for. Producer surplus increases consumer welfare because it increases the supply of goods and drives down prices.” Read more here
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