IANAE but from my perusal of the literature of "network effects" it would seem preferable for MS to stick with its current game plan of "embrace, extend and extinguish" even if it is a losing strategy. They are probably aiming to fight as long a rearguard action as possible. The stridency of their public statements in the last few months support this view.
As I understand it, the study of "network effects" became popular in the eighties and early nineties after the breakup of AT & T into the "Baby Bells" in 1982. Liebowitz (http://www.utdallas.edu/~liebowit/palgrave/networ k.html) and Economides (http://www.stern.nyu.edu/networks/top.html What a great name for an economist!) give an overview of network effects and Brian Arthur's Scientific American article (http://www.santafe.edu/arthur/Papers/Pdf_files/Sc iAm_Article.pdf) is the most accessible introduction.
In essence they argue that in modern knowledge based industries the laws of diminishing economic return do not apply. The value of a technology increases with increasingly widespread acceptance. Consumers will consider an inferior product at least partially because of its widespread acceptance, which they call its network effect or value.
Arthur's says that these technologies are characterised by postive feedback loops. He states that the Newtonian view of equal and opposites forces and steady state systems that apply to fixed resources technologies like goods manufacturing do not work for knowledge-based enterprises which are better analysed using chaos theory.
His belief is that a laissez-faire approach entrenches the dominant player in the market. Rather he suggests, "Steering an economy with positive feedbacks so that is chooses the best of its many possible equilibrium states requires good fortune and good timing-a feel for the moments at which beneficial change from one pattern to another is most possible. Theory can help us identify these states and times. And it can guide us in applying the right amount of effort (not too little but not too much) to dislodge locked-in structures. The English philosopher of science Jacob Bronowski once remarked that economics has long suffered from a fatally simple structure imposed on it in the 18th century. I find it exciting that this is now changing. With the acceptance of positive feedbacks, economists' theories are beginning to portray the economy not as simple but complex, not as deterministic, predictable and mechanistic, but instead as process-dependent, organic and always evolving."
With regards to standards, Liebowitz concludes that, "the greatest chance for some form of third-degree path dependence (see Path Dependence, this volume) to arise would be if an unowned standard with dispersed adherents were to engage in competition with a standard that had well defined ownership. Further research in this area is needed before any firm conclusions can be drawn, however."
The positive feedback effects of the GPL suggest that open source may be the next chaotic but stable state.
Slashdot Mirror
dude, you missed like 8 choices
there are 10 kinds of people: people that understand binary and people who don't.
The top poster was right.
There are 11 kinds of people: people that understand binary and people who don't.
Do rhetorical questions, need a question mark.
IANAE but from my perusal of the literature of "network effects" it would seem preferable for MS to stick with its current game plan of "embrace, extend and extinguish" even if it is a losing strategy. They are probably aiming to fight as long a rearguard action as possible. The stridency of their public statements in the last few months support this view.
r k.html) and Economides (http://www.stern.nyu.edu/networks/top.html What a great name for an economist!) give an overview of network effects and Brian Arthur's Scientific American article (http://www.santafe.edu/arthur/Papers/Pdf_files/Sc iAm_Article.pdf) is the most accessible introduction.
As I understand it, the study of "network effects" became popular in the eighties and early nineties after the breakup of AT & T into the "Baby Bells" in 1982. Liebowitz (http://www.utdallas.edu/~liebowit/palgrave/netwo
In essence they argue that in modern knowledge based industries the laws of diminishing economic return do not apply. The value of a technology increases with increasingly widespread acceptance. Consumers will consider an inferior product at least partially because of its widespread acceptance, which they call its network effect or value.
Arthur's says that these technologies are characterised by postive feedback loops. He states that the Newtonian view of equal and opposites forces and steady state systems that apply to fixed resources technologies like goods manufacturing do not work for knowledge-based enterprises which are better analysed using chaos theory.
His belief is that a laissez-faire approach entrenches the dominant player in the market. Rather he suggests, "Steering an economy with positive feedbacks so that is chooses the best of its many possible equilibrium states requires good fortune and good timing-a feel for the moments at which beneficial change from one pattern to another is most possible. Theory can help us identify these states and times. And it can guide us in applying the right amount of effort (not too little but not too much) to dislodge locked-in structures. The English philosopher of science Jacob Bronowski once remarked that economics has long suffered from a fatally simple structure imposed on it in the 18th century. I find it exciting that this is now changing. With the acceptance of positive feedbacks, economists' theories are beginning to portray the economy not as simple but complex, not as deterministic, predictable and mechanistic, but instead as process-dependent, organic and always evolving."
With regards to standards, Liebowitz concludes that, "the greatest chance for some form of third-degree path dependence (see Path Dependence, this volume) to arise would be if an unowned standard with dispersed adherents were to engage in competition with a standard that had well defined ownership. Further research in this area is needed before any firm conclusions can be drawn, however."
The positive feedback effects of the GPL suggest that open source may be the next chaotic but stable state.