Google, Zen Master of the Market - News Analysis - NYTimes.com

[DAVID FARBER <dave () farber net>]

http://www.nytimes.com/2008/07/07/technology/07google.html?_r=1&ref=technology&oref=slogin


July 7, 2008
NEWS ANALYSIS
Google, Zen Master of the Market

By STEVE LOHR
Bill Gates, who walked away from full-time work at Microsoft last  
month, was perhaps the foremost applied economist of the second half  
of the 20th century.

Mr. Gates and Microsoft fundamentally shaped how people think about  
the behavior of modern markets in which technology plays a central  
role. Under Mr. Gates, Microsoft also challenged the conventional  
wisdom about competition, business strategy and even antitrust law.

Now, in the early years of the 21st century, Google is the company  
prompting a rethinking of assumptions.

Microsoft was a master practitioner of “network effects,” the  
straightforward precept in economics that the value of a product or  
service often goes up as more people use it. There is nothing new  
about the concept. It was true of railways, telephones and fax  
machines, for example.

Microsoft, however, applied the power of network effects more  
lucratively than any company had done before it.

Microsoft attra





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