Popularity: Bringing a New Meaning to Self-Sustainable Growth
The concept of a self-sustaining idea or product, where the increased use of a product improves its quality, is extremely intriguing to me. In class, we learned about Facebook’s increasing popularity, which is due to the fact that Facebook has become incredibly useful because so many users are on it. In other words, the value of Facebook has increased due to the increase in the number of users using it.
The article I read discusses exactly this point, calling it “a virtuous cycle of self-sustainable growth” – or what we learned in class as popularity. The article cites many specific examples of how large popular firms owe their successes to this idea where “the value of a product or service is increased when more people use it,” such as Facebook, LinkedIn, Microsoft, Apple, and Google. In all of these examples, the article notes how each firm has remained especially cognizant of the magnifying power of popularity.
In particular, we can look to the use of different operating systems to understand why some companies do what they do. For example, Google offers its Android operating system for free to phone manufacturers. On the surface, this seems illogical, as one would wonder why Google wouldn’t prefer to utilize its Android operating system as a source of revenue. However, the article illuminates this issue, explaining that the reason as to why Google does this is that it wants to increase the popularity of its operating system among users. By offering the service for free, phone manufacturers are more inclined to use the Android operating system. This in turn increases the popularity of the system, and more mobile app developers will make their applications compatible with it, ensuring that any phones using the Android operating systems will have access to a wide variety of apps. Google has thus established a symbiotic relationship between itself and phone manufacturers – the value of its operating system increases while the quality of the phones increases as well. We can attribute this smart strategic move on Google’s part to its thorough understanding of popularity, where the value of a product increases when more people use it.
This can also be seen in Microsoft’s stubborn advantage in its competition with Apple, in that its Windows operating system is already well-established. In this sense, many of the most relevant applications, like Microsoft Word, are compatible with Windows already. Apple, as the newcomer, must ensure that their products are just as compatible as Microsoft’s are, so that users will want to switch from Microsoft to Apple. Even still, the switch has not been as fast as Apple hopes – many businesses still utilize the Windows operating system simply because they already know how to use it and the services they use are compatible with Windows. In particular, one thing I’ve noticed is that in the never-ending debate between programmers and those who use computers for personal use, programmers consistently insist that computers with the Windows operating system are much easier to write code in that in the Apple operating systems. Clearly, Apple has not made coding as smooth and compatible in its products, and so Microsoft users have largely remained loyal to Microsoft’s products.
We can also tie this inherent advantage in the power of popularity to economics, where the multiplier effect plays a large role in fiscal and economic policy ramifications. Just as the money multiplier measures how much money supply increases in society in response to a change in the monetary base amount (controlled by the Fed), so does the concept of popularity encompass the phenomenon where the success of a product is “multiplied” by the increases in user base. The theme behind this idea is that a product will first slowly gain some traction, i.e. some users, and once more and more users use the product, even more users will become attracted to it and the product will gain traction even more quickly. Again, this self-perpetuating trend goes to show that the effects of initial user traction are magnified by popularity – once a company can set its products in motion, as Google’s Android operating system, Microsoft’s Windows, and Apple’s products have done, the power of popularity will take it from there.
From the concept of popularity, we can see that a company doesn’t necessarily need to hit the ground running. Apple is a classic example, where initially, its popularity was nowhere near where it is today. In fact, some of Apple’s products flopped at the beginning of company’s history before they eventually took off with the introduction of the iPods and MacBooks. So long as companies acknowledge and focus on the power that popularity, they can harness this power to make the success of their products self-sustainable.
Source: http://www.wtop.com/247/3082384/Investing-to-Profit-From-the-Power-of-Networks
– powerofpopularity