Spring is blossoming and that has me thinking about new birth….of markets, of course! And what new market has impacted our lives more than video-conference technology and our new friend, Zoom?! Zoom is interesting because it is an example of a network good. This means the product's value depends on how many other people have it. Consider the first telephone- if no one else owns one, it's rather useless. However, once your business, your customers, and your mom are linked into the network, it becomes a highly valued item!
PC operating systems show the same phenomenon. Microsoft initially dominated the market because it was easier for businesses to interact using the same operating system and products. Only a niche group wanted to learn the Apple OS and shoulder the extra hassle of interacting with Microsoft users.
These examples illustrate two key pieces of a network good: 1) there are investment costs in learning to use it 2) its value depends on the number of users in the network. Zoom hit both these pieces at the pandemic onset. First, it was simpler and more intuitive than its existing competitors, such as Skype. Second, it offered a scaled-down version for free. This led to an explosion in users, increasing the value of paying for the full version.
Now, may I suggest you share this post on Twitter, Facebook, email, or whatever network good you and your friends value most??