Controlling the positive network externalities when facing inter-technological competition

Winning the battle to become the dominant design or de facto standard is crucial since the survival of the firm may be at stake. This paper examines these inter-technological battles from a perspective of positive network externalities broken down into installed base and complementary assets. A model for analyzing or forecasting battles is created based on previous literature and case studies. The model makes an attempt at describing the complex affects that strategic maneuvers have on the network externalities. This model is then used to forecast the current batle between HD DVD and Blu-ray to become the successor of DVD and the result indicates a slight lead for HD DVD.

Keywords:

Dominant design , De facto standard , Installed base , Complementary assets , Network externality