1 / 18

Fence Sitters & Network Effects

Fence Sitters & Network Effects. Peter Corless 23 October 2003. Linux was hot. Then it was not. 1991 - Linus begins work, v0.02 1992 - Debian GNU/Linux released 1993 - SUSE Linux distribution 1994 - Linux v1.0 releases 1998 - KDE 1.0; a GUI for End-Users 1999 - Red Hat goes public

ciara-bowen
Download Presentation

Fence Sitters & Network Effects

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Fence Sitters & Network Effects Peter Corless 23 October 2003

  2. Linux was hot. Then it was not. • 1991 - Linus begins work, v0.02 • 1992 - Debian GNU/Linux released • 1993 - SUSE Linux distribution • 1994 - Linux v1.0 releases • 1998 - KDE 1.0; a GUI for End-Users • 1999 - Red Hat goes public • 2000 - Red Hat, Caldera peak, then bust • 2001 - Red Hat & Caldera trough • 2002 - MandrakeSoft goes public,slumps • 2003 - Market picking up, barely MARKET EXPECTATIONS WERE BATTERED

  3. Linux Users — Wild Guesses • 1993: 100,000 est. • 1994: 500,000 est. • 1995: 1,500,000 est. • 1996: 3-5 Million est. • 1997: 1.4 - 4.5 Million est. • 2003: 18 Million? est. • 1997: 230,000 Linux shipments • 1998: 748,000 shipments The Linux Counter http://counter.li.org/

  4. linux.oreilly.com SubscribersYear 2000 • 26% programmer/developer • 19% system administrator • 15% consultant • 8% IS/MIS manager/staff • 7% student • 6% webmaster/web designer/producer • 19% otherSource: O'Reilly Network registered users survey; February, 2000 STILL DRIVEN BY TECHNOLOGISTS, NOT END USERS

  5. Linux Bangalore/2002 Demographics • 61% Developers/Engineers/R&D • 15% Students • 14% Sysadmins/Networking/Internet • 4% Education/Training/Consulting • 6% Other CULTURAL SHIFT OCCURRING; STUDENT ADOPTION

  6. A Guide to Fence Sitting:Barriers to Adoption • Market Competition — Monetary-Political Forces • Microsoft, Unix, etc. • Allied Vendors for Services & Products • Installed Base Inertia • Switching Costs • Redevelopment Costs • Social Barriers — Human Inertia • Status Quo & Laziness • Community/Individual Compartmentalization: States, Markets, market segments, Companies, Business & IT Management, Sysadmins, Developers, Users • Resistance to change-for-sake-of-change • Technological Religion • Indifference Curves • Learning Curves • Quasi-Rationality

  7. Emotional Barriers • “Gravity Wells of the Status Quo” • Loyalty, Satisfaction,Comfort, Joy • Blissful Ignorance & Laziness • “Mountains of Change” • Isolation, Dissatisfaction, Discomfort, Pain • Intimidation of the New • Desires • Gifts & mutually advantageous exchange • Concerns • Coercion & Threats • FUD — Fear, Uncertainty, Doubt

  8. Adoption Curve Systems Admin Community (Server Market) Carpetbaggers & Dot.Com’ers Developers &Early Adopters General Purpose & Specialty Markets (Desktop, Game, Embedded Linux) Technology Champions 1991 1994 1997 2000 2003 2006 2009

  9. Competitive Resistance Points Windows 2000, Mac OS X Windows 98 Windows Server 2003 Windows NT 4.0(1996) Windows NT 3.1 (1993) Solaris 9 Mac OS X 10.2 1991 1994 1997 2000 2003 2006 2009

  10. Successes:Developer/Server Markets • Captured developer, systems administration & technophile attention • Significant inroads in server& appliance markets • Major OEM hardware supporters • IBM, HP, etc. — Even Sun! • GUI & Application Suites mean Linux desktop solutions can pass “blush test” • Still considered too geeky and isolated to compete head-to-head with Windows or Macs. • Sufficient for a Linux user to “fit in” with other OS’s.

  11. Present Barriers:Desktop, Laptop, Devices • Mass Market Mindshare • Fighting “Brand Names” of Microsoft & Apple • No “end-to-end” strategy of server-to-desktop-to-devices (a la .NET, or even iTunes) • High Geek Factor • Not for Home or Office Use? • Still thought of as “technology” not “business” or “family” solution • Few games (PS2-Linux is late-to-the-gate) • Unification vs. Fragmentation • Shades of original Unix shredding • Can laissez faire compete with megalopolies?

  12. Market Tipping • Changing dominant players, or allowing a dominant player to emerge Likelihood of Market Tipping to a Single Technology Low Economies of Scale High Economies of Scale Low Demandfor Variety Unlikely High High Demand for Variety Low Depends Source: Information Rules, pg. 188, Carl Shapiro & Hal R. Varian

  13. Are there economies of scale in the Linux market? • Demand-side economies of scale • “Network Effect” • Metcalfe’s Law = Power of Net = Nodes2 • Superior Utility Value • Performance/Productivity Revolution • Compatibility • Progress & Migration Path • Supply-side economies of scale • Consolidated production • Strong distribution channels

  14. “We Have Met the Enemy,and He is Us” — Pogo • Fractionalization of market due to Linux “flavors” from multiple vendors • Microsoft faces the same problem • There seems to be “tipping” towards dominant Linux vendors & OEM/solutions partners • Intellectual property challenges • Continuing challenge to look at market from “outsider’s” point-of-view. • Technological development must evolve towards user-centered design • Customer and business services will become more important to success than point product features.

  15. Fence Sitter Use Case:Peter Corless • Long-time user of Macintosh, Unix, Windows operating systems • Prefers emacs to vi (old CMU habit) • Has MacOS X, Windows systems • Small business web site on FreeBSD 4.4 • Invested in a (now defunct) Linux startup. • Open-minded, but can’t spend much time on technology (has business to run) • Interest from a “some day I’d love to have time to code, and then I’ll get a Linux box” fantasy.

  16. Barriers for Adoption • Web Site • OS provided by my ISP (Verio. Go hunt them down!) • Why migrate content to another box at same ISP or abandon ISP just to jump to Linux? • Wouldn’t mind if the ISP swapped what site was running on, but only if there was no cost to change. • Linux is killed on the Indifference Curve • No current “killer app” running under Linux for web services that doesn’t also run on BSD • Value of Linux unclear vs. FreeBSD. (Both have perl, php, egrep, emacs, MySQL, etc., right?)

  17. More Barriers for Adoption • Desktop • Marriage to application suites (MS Office) • Key applications on other OS’s (Adobe Photoshop & Illustrator) • Technology “splooge” • Maintaining a third OS is too much • What’s the payback? • Lack of hands-on opportunities • Lack of time to get started & maintain • No “killer app” that makes it all worthwhile

  18. References • http://www.nevod.ru/linux/news/article/linuxmarket.html • http://news.com.com/2100-1001-984010.html • http://www.newsfactor.com/perl/story/11177.html • http://thewhir.com/features/linux-market-share.cfm • http://www.newsfactor.com/perl/story/22290.html • http://www.oreillynet.com/pub/a/mediakit/linuxaudience.html • Information Rules: A Strategic Guide to the Network Economy, Carl Shapiro and Hal R. Varian, Harvard Business School Press, 1999 (ISBN 0-87584-863-X)

More Related