In the absence of network effects, the value of a product or service increases as the number of users grows.
In a market influenced by network effects, the winning product or service is often determined by its technical superiority, with technically strong newcommers able to unseat the dominant incumbents.
The video game console market is a network market in which Sony's PlayStation 2 (PS2) dominated over Microsoft's Xbox offering. This has been possible due to:
game developers favoring PS2 for its larger user base obtained because the PS2 was launched months before the Xbox.
Network effects do not influence all consumer products or services.
Question 4 1 / 1 pts Microsoft's Live Maps and Virtual Earth 3D was a late entrant to the Internet mapping game. Users had already put in countless hours building resources that meshed with Google Maps and Google Earth. However, by adopting the same keyhole markup language (KML) standard used by Google, any work done by users for Google in KML could be used by Microsoft. What strategy of Microsoft has allowed it to catch up with Google? Exchanging technical expertise in one area with another firm to effectively suit resource capabilities Making a new market a subset of its main offering
leveraging a firm 's customers to promote a product or service .
a dominant market share does not necessarily translate to greater profitability for a firm . the presence of multiple new entrants forces leading firms to drop prices of their offerings .