Shapiro-Varian - Information Rules Exzerpt
Aus Leowiki
Shapiro, C./Varian, H.R. (1999): Information Rules: a strategic guide to the network economy. Harvard Business School Press
“Information is costly to produce but cheap to reproduce.” (S. 3, Herv. i. Orig.)
“Economists say that a good is an experience good if consumers must experience it to value it. […] But information is an experience good every time it’s consumed. […] Most media producers overcome the experience good problem through branding and reputation.” (S. 5; Herv. i. Orig.)
“The dependence of information technology on systems means that firms must focus not only on their competitors but also on their collaborators. […] The history of the Microsoft-Intel partnership is a classic example. Microsoft focused almost exclusively on software, while Intel focused almost exclusively on Hardware. […] It’s in the interest of each company to create multiple sources for its partner’s piece of the system but to prevent the emergence of a strong rival for its own piece. […] Apple Computer pursued a very different strategy by producing a highly integrated product consisting of both a hardware platform and the software that ran on it. Their software and hardware was much more tightly integrated than the Microsoft/Intel offerings, so it performed better. (Microsoft recognized this early on and tried to license the Apple technology rather than investing in developing its own windowing system.) The downside was that the relative lack of competition (and, later, scale) made Apple products more expensive and, eventually, less powerful. In the long run, the “Wintel” strategy of strategic alliance was the better choice. (S. 10-11)
“[S]witching costs and lock-in: once you have chosen a technology, or a format for keeping information, switching can be very expensive. […] In fact, the magnitude of switching costs is itself a strategic choice made by the producer of the system.” (S. 11-12)
“When the value of a product to one user depends on how many other users there are, economists say that this product exhibits network externalities or network effects. […] Technologies subject to strong network effects tend to exhibit long lead times followed by explosive growth. The pattern results from positive feedback: as the installed base of users grows, more and more users find adoption worthwhile. Eventually, the product achieves critical mass and takes over the market.” (S. 13; Herv. i. Orig.)
“But network externalities are not confined to communications network. They are also powerful in ‘virtual’ networks, such as the network pf users of Macintosh computers: each Mac user benefits from a larger network, since this facilitates the exchange of files and tips and encourages software houses to devote more resources to developing software for the Mac. […] As a result, growth is a strategic imperative, not just to achieve the usual production side economies of scale but to achieve the demand side economies of scale generated by network effects. […] In competing to become the standard, or at least to achieve critical mass, consumer expectations are critical. In a very real sense, the product that is expected to become the standard will become the standard. Self-fulfilling expectations are one manifestation of positive-feedback economics and bandwagon effects.” (S. 13-14; Herv. i. Orig.)
“When network effects are strong, product announcements can be as important as the actual introduction of products.” (S. 15)
“A go-it-alone strategy typically involves competition to become the standard. By contrast, participation in a formal standard-setting process, or assembling allies to promote a particular version of technology, typically involves competition within a standard.” (S. 16-17; Herv. i. Orig.)
“Information delivered over a network in digital form exhibits the first-copy problem in an extreme way: once the first copy of the information has been produced, additional copies cost essentially nothing. […] [T]he fixed costs of production are large, but the variable costs of reproduction are small. This cost structure leads to substantial economies of scale: the more you produces, the lower your average cost of production. […] the dominant component of the fixed costs of producing information are sunk costs, costs that are not recoverable if production is halted. […] The variable costs of information production also have an unusual structure: the cost of producing an additional copy typically dows not increase, even if a great many copies are made.” (S. 21; Herv. i. Orig.; Anm.: Wichtig für Pfadabhängigkeit ist nicht (nur) die Höhe der fixen Kosten, sondern insbesondere der Anteil an sunk costs daran.)
„[T]here are only two sustainable structures for an information market: 1. the dominant form model may or may not produce the ‘best’ product, but by virtue of its size and scale economies it enjoys a cost advantage over its smaller rivals. Microsoft is everyone’s favourite example, since it controls the market for operating systems for desktop computers. 2. In a differentiated product market we have a number of firms producing the same ‘kind’ of information, but with many different varieties. This is the most common market structure for information goods: the publishing, film, television, and some software markets fit this model.” (S. 24-25; Herv. i. Orig.; Anm.: Marktstruktur ist aber eben nicht “gottgegeben”!)
„When the costs of switching from one brand of technology to another are substantial, users face lock-in. Switching costs and lock-in are ubiquitous in information systems, and managing these costs is very tricky for both buyers and sellers.” (S. 104; Herv. i. Orig.)
“Even when switching costs appear low, they can be critical for strategy. A million customers, each of whom has switching costs of $ 100, are just as valuable, collectively, as a single customer whose switching costs to revenues on a per-customer basis and add up these costs across your entire installed base to value that base” (S. 108, Herv. i. Orig.)
“Both the customer’s and the supplier’s costs arej important. Adding them up gives the total switching costs associated with a single customer” (S. 112; Herv. I. Orig.)
“A pattern of lick-in similar to that associated with the purchase of durable products results when personnel are trained to use them. […] With brand-specific training, switching costs tend to rise with the time, as personnel become more and more familiar with the existing system. The opposite is true for durable hardware, which becomes less costly to replace as it ages and as new models with superior performance are introduced. The obius example fopr many of us is computer software.” (S. 121; Anm.: Software-Lock-In ist daher viel wahrscheinlicher, stärker und dauerhafter als ein Hardware-Lock-In.)
„Another important pattern arises when buyers purchase specialized queipment gradually over time. As a buyer, remember that your choices today will dictate your needs tomorrow.” (S. 123)
“Our next category includes switching costs that are more mundane, but not to be ignored, especially in mass markets: the search costs incurred by buyers and sellers to find each other and establish a business relationship.” (S. 126; Anm.: Zu den search costs sind insbesondere bei öffentlichen Auftraggebern die Ausschreibungskosten zu zählen, die idR beträchtlich sind und nur beim Versuch, sich für M$-Alternativen zu öffnen, anfallen.)
„[T]he lock-in cycle is not a zero-sum game. Both buyers and sellers benefit by structuring their relationship wisely at the outset of the cycle.” (S. 142)
“The result is that competition indeed wrings excess profits out of the market, but only on a life-cycle basis. The inescapable conclusion: firms will lose money (invest) in attracting customers, and (just) recoup these investments from profitable sales to locked-in customers.” (S. 145)
“Microsoft, of course, has a key strategic advantage in its dominance of the desktop operating environment. It wants to integrate its Internet browser with the file browser and other components of Windows 95 in a way that Netscape will find hard to imitate. Microsoft has said that the Internet Explorer will ‘always be free,’ but what this means is that it will simply be bundled with the company’s desktop environment., either through bundling or by some type of product integration.” (S. 150)
“The familiar if sad tale of Apple Computer illustrates this [positive feedback, Anm. L.D.] crucial concept. Apple has suffered of late because positive feedback has fuelled the competing system offered by Microsoft and Intel- As Wintel’s share of the personal computer market grew, users found the Wintel system more and more attractive. Success begat more success, which is the essence of positive feedback. With Apple’s share continuing to decline, many computer users now worry that the Apple Macintosh will shortly become the Sony Beta of computers, orphaned and doomed to a slow death as support from software producers gradually fades away. This worry is cutting into Apple’s sales, making it a potentially self-fulfilling forecast. Failure breeds failure: this, too, is the essence of positive feedback.” (S. 173-174)
“Whether real or virtual, networks have a fundamental economic characteristic: the value of connecting to a network depends on the number of other people already connected to it. This fundamental value proposition goes under many names: network effects, network externalities, and demand-side economies of scale” (S. 174; Herv. i. Orig.)
“Positive feedback should not be confused with growth as such. Yes, if a technology is on a roll, as the Internet today, positive feedback translates into rapid growth: success feeds on itself. This is a virtuous cycle. But there is a dark side of this force. If your product is seen as failing, those very perceptions can spell doom. […] When two or more firms compete for a market where there is strong positive feedback, only one may emerge as the winner. […] [S]uch a market is tippy, meaning that it can tip in favour of one player or another.” (S. 176; Herv. i. Orig.)
“[T]raditional economies of scale based on manufacturing have generally been exhausted at scales well below total market dominance, at least in the large U.S. market. In other words, positive feedback based on supply-side economies of scale ran into natural limits, at which point negative feedback took over. […] In the information economy, positive feedback has appeared in a new, more virulent form based on the demand side of the market, not just the supply side. Consider Microsoft. […] Oh, sure, there are scale economies, in designing software, as for any other information product. But there are several other available operating systems that offer comparable (or superior) performance to Windows 95 and Windows NT, and the cost of developing rival operating systems is tiny in comparison with Microsoft’s market capitalization. The same is true of Microsoft’s key application software. No, Microsoft’s dominance is based in demand-side economies of scale. Microsoft’s customers value its operating systems because they are widely used, the de facto industry standard. Rival operating systems just don’t have the critical mass to pose much of a threat. Unlike the supply side economies of scale, demand-side economies of scale don’t dissipate when the market gets large enough: if everybody else uses Microsoft Word, that’s even more reason for you to use it too.” (S. 179-180; Herv. i. Orig.)
“Both demand-side economies of scale and supply-side economies of scale have been around for a long time. But the combination of the two that has arisen in many information technology industries is new. The result is a ‘double whammy’ in which growth on the demand side both reduces cost on the supply side and makes the product more attractive to other users – accelerating the growth in demand even more.” (S. 182)
“Computer buyers are picking a network, not simply a product, when they buy a Mac, and Apple must design its strategy accordingly. Building a network involves more than just building a product: finding partners, building strategic alliances, and knowing how to get the bandwagon rolling can be every bit as important as engineering design skills.” (S. 183)
“Network externalities make it virtually impossible for a small network to thrive. But every new network has to start from scratch. The challenge to companies seeking to introduce new but incompatible technology into the market is to build network size by overcoming the collective switching costs – that is, the combined switching costs of all users.” (S. 184; Herv. i. Orig.)
“There are two basic approaches for dealing with the problem of consumer ineratia: the evolution strategy of compatibility and the revolution strategy of compelling performance. Combinations are possible” (S. 190-191; Herv. i. Orig.)
“The evolution strategy, which offers consumers an easy migration path, centers on reducing switching costs so that consumers can gradually try your new technology. […] The key to the evolution strategy is to build a new network by linking it first to the old one.” (S. 192)
“The revolution strategy involves brute force: offer a product so much better than what people are using that enough users will bear the pain of switching to it.” (S. 195)
“Under full openness, anybody has the right to make products complying with the standard, whether they contributed to its development or not. Under an alliance approach, each member of the alliance contributes something toward the standard, and, in exchange, each is allowed to make products complying with the standard.” (S. 200)
“If the standard is truly open, consumers will be less concerned about lock-in.” (S. 230)
“Standardization does have some downsides for consumers, however. The main one is a loss of variety: the standard may be poorly suited to some customer’s needs, or it may just turn out to be an inferior technology, like QWERTY.” (S. 233)
