Companies that can transform their traditional business models into network models will have a competitive advantage based on new insights into pricing, network effects, supply chains, and strategy. These principles show how dotcom companies like Airbnb, Amazon, Apple and Uber managed, in a relatively short time, to attract millions of clients worldwide. But they apply also to traditional product companies like Sony, shoe companies like Nike, and spice companies like McCormick. New business models help these companies extend existing transactions to new, associated products and services. Platforms beat products every time. This talk reveals the secret of Internet-driven platforms, why they happen, and what changes they imply.
42. If markets are independent, collect profits in both.
Price
Quantity
Market One
q1
p1
Price
Quantity
Market Two
q2
p2
See "Two Sided Network Effects” (2006) Management Science, Parker & Van Alstyne
43. But if markets are coupled, discounting one builds demand in the
other.
Price
Market One
Quantity
q1
p1
p1
q1
Price
Market Two
Quantity
q2
p2
p2
q2
See "Two Sided Network Effects” (2006) Management Science, Parker & Van Alstyne