Bandwagon effects in high-technology industries / Jeffrey H. Rohlfs.

Format:

Book

Author/Creator:

Rohlfs, Jeffrey H., author.

Language:

English

Subjects (All):

High technology industries--United States--Case studies.

High technology industries.

United States.

Genre:

Case studies.

Physical Description:

1 online resource (xiv, 256 pages) : illustrations

Place of Publication:

Cambridge, Mass. : MIT Press, [2001]

System Details:

text file

Summary:

Economists use the term "bandwagon effect" to describe the benefit a consumer enjoys as a result of others' using the same product or service. The history of videocassettes offers a striking example of the power of bandwagon effects. Originally there were two technical standards for videocassettes in the United States: Beta and VHS. Beta was widely regarded to have better picture quality, but VHS could record longer television programs. Eventually the selection of Beta cassettes shrank to zero, leaving consumers no choice but to get on the VHS bandwagon. The most successful bandwagon, apart from telephone service, is the Internet.In this book, Jeffrey Rohlfs shows how the dynamics of bandwagons differ from those of conventional products and services. They are difficult to get started and often fail before getting under way. A classic example of a marketing failure is the Picturephone, introduced by the Bell System in the early 1970s. Rohlfs describes the fierce battles waged by competitors when new services are introduced, as well as cases of early agreement on a single technical standard, as with CDs and CD players. He also discusses the debate among economists and policy analysts over the advantages and disadvantages of having governments set technical standards. The case studies include fax machines, telephones, CD players, VCRs, personal computers, television, and the Internet.

Contents:

1 The High-Technology Bandwagon 3

2 A Bandwagon Tour 7

2.1 A Guide to the Tour 8

II Bandwagons: How They Work 13

3 Bandwagon Demand 19

3.1 Equilibrium User Sets 20

3.2 Demand as a Function of Price 24

3.3 Metcalfe's Law 29

3.4 Dynamics of Complementary Bandwagon Effects 30

4 Bandwagon Supply 33

4.1 Monopoly versus Competition 33

4.2 Interlinking 34

4.3 Solving the Start-Up Problem 35

4.4 Incentives of Suppliers to Interlink 45

4.5 Supply Coordination with Complementary Bandwagon Products 47

4.6 Technical Standards 48

4.7 Proprietor Services versus Customer Equipment 50

4.8 Mature Services 51

4.9 Predatory Pricing 53

5 Summary of Results of Bandwagon Theory 55

5.1 The Cheat Sheet 55

6 Fax 61

6.1 Lessons from Case Study 67

7 Early Telephone 69

7.1 Pricing of Exchange Service 69

7.2 Interlinking 79

7.3 Lessons from Case Study 80

8 Picturephone 83

8.1 Picturephone as an Intercom Service 87

8.2 Constructing a Self-Sufficient User Set 88

8.3 Actual Outcome 89

8.4 Lessons from Case Study 89

9 Compact-Disc Players 91

9.1 Technological Standard 92

9.2 CDs Not Available 95

9.3 Small Libraries of CDs 96

9.4 Subsequent Developments 98

9.5 Other Digital Players of Recorded Music 99

9.6 Lessons from Case Study 104

10 VCRs 105

10.1 Early Developments 105

10.2 Early VCR Use 106

10.3 Beta versus VHS 107

10.4 The Bandwagon 109

10.5 The Hollywood Assault 111

10.6 The Videocassette Business 112

10.7 Videodisc Players 113

10.8 Lessons from Case Study 115

11 Personal Computers 117

11.1 Early Application Software 119

11.2 The Rise of the IBM PC 119

11.3 The Decline of the IBM PC 121

11.4 The Role of Apple 124

11.5 The Rise of Intel and Microsoft 127

11.6 Microsoft's Pricing 129

11.7 Recent Applications Software 131

11.8 Linux 132

11.9 Java 133

11.10 The Role of Misjudgments 134

11.11 Lessons from Case Study 135

12 Television 137

12.1 The Emergence of Television 137

12.2 Color Television 143

12.3 High-Definition Television 148

12.4 Lessons from Case Study 164

13 The Internet 167

13.1 Size and Growth of the Internet 168

13.2 Telecommunications Technology 172

13.3 Evolution of the Computer Industry 176

13.4 Telecommunications Prices 177

13.5 The Development of ARPANET 179

13.6 Other Packet-Switched Networks 181

13.7 NSFNET 188

13.8 The Internet after NSFNET 189

13.9 Externalities and Transactions Costs 189

13.10 Current Internet Usage 190

13.11 A Final Reflection 191

13.12 Lessons from Case Study 191

14 Summary of Results 195

14.1 Start-Up Problem 197

14.2 Vertical Integration 197

14.3 Bandwagon Markets without Interlinking 198

14.4 Agreeing to a Technical Standard 199

14.5 Government Intervention 201

15 Final Remarks 203.

Notes:

OCLC-licensed vendor bibliographic record.

ISBN:

9780262256889

0262256886

9780262254304

0262254301

0585436126

9780585436128

OCLC:

51958839

Access Restriction:

Restricted for use by site license.