The Importance of Network Effects for Cloud Computing
The term network effects is also known as network externality. One way to explain it is that the value of a product or a service tends to increase when more and more people use it. However, there also exists negative network effects. As stated in this article, the network effects play a increasingly critical role in traditional softwares, including Google, Facebook and many other social networks. Sina Weibo, one of the most popular and undefeatable mini-blogging service in China that is similar to Twitter. By the time when Weibo was first launched, I barely heard my friends talking about it. But as more people around us started using Weibo and conveyed information there all of a sudden, I became one of the users too.
As we know, cloud computing allows big data processing over the internet. By the time when this article is reported, the cloud computing markets were still in early stages. As a newly emerging technology at that time, cloud computing was lack of interoperability and integration. But once it is effectively and appropriately used in the technology field, the power of network effects could somehow be an engine fueling for a better development of cloud computing.
However, the article also pointed out that the possible negative effects the network effects could bring. If all people use the cloud storage of a single social network, hackers who seek to steal users’ information from the networks could lead to huge loss. Therefore, it is significant for those who are in the technology field to bring in the network effects to explore and study the subjects.