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

Trade-off of the Day

"When choosing terms and conditions, recognize the basic trade-off: more liberal terms and conditions will tend to raise the value of your product to consumers but may reduce the number of units sold."

Shapiro, C. and Varian H.R. 1998. Information Rules. Boston: HBSP. p. 103.

A Bloomberg article about possible Microsoft Yahoo merger:

The New York Times reported Feb. 4 that Google CEO Eric Schmidt contacted Yang to suggest a partnership between their companies. A partnership with Google may allow Yahoo to outsource its search service, shedding the costs of running its own search engine and sharing ad revenue with its larger rival.

What a way for Google to get rid of all competition in the search technology! A very smart move because it could potentially deny Microsoft access to a high quality search engine. If that happens the Yahoo acquisition does not make sense for Microsoft at all.

A CNN article about Osprey, a plane-helicopter hybrid:

The Osprey, which takes off and lands like a helicopter but flies like a plane, was designed to replace the Corps' aging and less-capable helicopter fleet.

The military, which has ordered 360 of the aircraft, said the 10 deployed to Iraq are doing what they are supposed to do -- carrying troops faster, farther and safer than the copters can.

In December, commanders gave the planes a more risky mission called "aero-scout" in which a group of V-22s flies into a relatively unsecured location and drops off Marines for a search mission.

The Osprey seems to have become a favorite of commanders who need to get to places quickly, including Gen. David Petraeus, the top U.S. military commander in Iraq. Petraeus used one to fly around the country on Christmas Day to visit troops.

"Gen. Petraeus flew in the jump seat and was very impressed by the aircraft's capabilities," according to Col. Steve Boylan, a spokesman for the general.

"The rate of climb is exceptional, and it can fly about twice as fast as a Black Hawk [helicopter], without needing to refuel as frequently," Boylan said. "Beyond that, its automatic-hover capability for use in landing in very dusty conditions, even at night, is tremendous."

Petraeus chose the Osprey for that mission because it was the only aircraft in the inventory that could fly around the country without refueling and not rely on runways, Boylan said.

Another indicator that helicopters are going to yield the scene to other flying apparatuses, like ospreys and drones.