Wednesday, February 20, 2008

Trade-off of the Day

These strategies reflect an underlying tension when the forces of innovation meet up with network externalities: is it better to wipe the slate clean and come up with the best product possible ( revolution) or to give up some performance to ensure compatibility and thus ease consumer adoption (evolution)?


You can increase performance at the cost of increasing customer switching costs, or vice-versa. Ideally, you would like to have an improved product that is also compatible with the installed base, but technology is usually not so forgiving, and adapters and emulators are notoriously buggy. You will inevitably face the trade-off.

Shapiro, C. and Varian H.R. 1998. Information Rules. Boston: HBSP. p. 191

No comments: