Question

Becoming the Dominant Design

The combination of network externality returns to market share and technological utility influence the level of market share at which point one technology will dominate another. For some industries, the full network externality benefits are attained at a minority market share level. In these industries, multiple designs are likely to coexist. The outcomes are: to understand the factors determining timing for market penetration. To determine traits of a dominant design. To recognize factors of being a pioneer in industries, and to assess how to demonstrate increasing returns of adoption.

Respond to the following QUESTIONS:

What are some of the ways a firm can try to increase the overall value of its technology and its likelihood of becoming the dominant design?

Give an example in your answer.

Answer 1

Ways through which firms can improve the value of its technology and likelihood of becoming dominant design:

Increasing the standalone value of the technology to the customer through better functionality, ease of use and aesthetics. For example, Windows OS gives its customers the ability to easily interact with the computer.

Network externality value: In addition to stand alone benefits, value can also be created by the size of installed base and availability of complementary goods. For example, Windows OS gives its customers the installed base of the OS and the availability of compatible software.