News for hackers. Stuff that matters.
Re:Microsoft to buy Skype for $7 billion by jokermatt999 on Tuesday May 10, 2011 @11:15AM (#2532739)
Most people I know who use Skype didn't have a video/computer calling solution before Skype. The barrier to installation for a new service that is much lower than switching to a competing service. If they're just getting into that kind of service, the benefits are quite large. Switching to a competing service has much less utility to them, because they already have a solution for the main problem; in this example, calling people. Switching requires losing their old contacts (network effect) as well as learning a new system. To put it in equation:

Installing something like skype for the first time:

Total utility of program - hassle of installing and learning a new program = large benefit

Installing a competitor:

Marginal utility of somewhat better program - previously available contacts on old system - hassle of installing and learning a new program = much less benefit

There are no comments on this comment yet.