Enterprise, Costumer Relationship Management, Tecnology, Bussines

1. STANDARDS BATTLES
AND DESIGN
DOMINANCE
A Battle Emerging in
Mobile
Payments
Chapter 4
SISTEM INFOMASI
NADA PUTRI BULAN

2. Standart Design
In the United States, several large players,
including Apple, Samsung, and a joint venture
called Softcard between Google, AT&T, T-
Mobile, and Verizon Wireless, had developed
systems based on Near Field Communication
(NFC) chips in smartphones.
NFC chips enable communication between a
mobile device and a point-of-sale system just
by having the devices in close proximity. The
systems transferred the customer’s
information wirelessly and then used merchant
banks and credit card systems such as Visa or
MasterCard to complete the transaction.
These systems were thus very much like
existing ways of using credit cards but enabled
completion of the purchase without contact.

3. Why Dominant Designs Are Selected
Why do many markets coalesce around a single Dominant
Design? One primary reason is that many industries
exhibit increasing returns to adoption, meaning that the
more a technology is adopted, the more valuable it
becomes.
A technology that is adopted usually generates revenue that can
be used to further develop and refine the technology.
Finally, as a technology becomes more widely adopted,
Complementary Assets are often developed that are
specialized to operate with the technology. These effects
can result in a self-reinforcing mechanism that increases the
dominance of a technology regardless of its superiority or
inferiority to competing technologies.

4. The standard form of the learning curve is formulated as y 5
ax2b, where y is the number of direct labor hours required to
produce the xth unit, a is the number of direct labor hours
required to produce the first unit, x is the cumulative number
of units produced, and b is the learning rate.

5. Network Externalities
Many markets are characterized by network externalities,
or positive consumption externalities.
In a market characterized by network externalities, the
benefit from using a good increases with the number of
other users of the same good.
The classic examples of markets demonstrating network
externality effects are those involving physical
networks, such as Railroads or Telecommunications.
Railroads are more valuable as the size of the railroad
network (and therefore the number of available
destinations) increases. Similarly, a telephone is not
much use if only a few people can be called with it the
amount of utility the phone provides is directly related
to the size of the network.

6. Network Externalities
Network externalities also arise when complementary
goods are important. Many products are only functional
or desirable when there is a set of complementary
goods available for them (videotapes for VCRs, film
for cameras, etc.).
Some firms make both a good and its complements (e.g.,
Kodak produced both cameras and film), whereas
others rely on other companies to provide
complementary goods or services for their products
(e.g., computer manufacturers often rely on other
vendors to supply service and software to customers).

7. Competing for Design Dominance
in Markets with Network Externalities
Graphs illustrate how differing technological utilities and
network externality returns to installed base or market share
impact the competition for design dominance.

8. FINISH....
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