Lean Mobile App Development

The network effect

To illustrate the first type of network effect, we will look at the world's largest social app and the world's largest online retail company, Facebook and Amazon. Both starkly illustrate how users contribute to, and amplify, the value of a product or service.

Examine how the network effect plays out with both of these companies:

• The more people that use Facebook, for instance, the more momentum and value it accrues, since it can be used to connect with more and more people. A byproduct of this effect is that the value of competing social networks is diminished, making it more difficult to switch to a competitor. This effect, known as a switching cost, is examined in more detail further.
• In Amazon's case, the more sellers ...