Independent Institute Response To Phillip Hallam-Baker ("network externality")

[Phillip Hallam-Baker]

Did they ever give it credence as the sole evidence on which the existence
of network effects and lock in exist?

I read the L-M evidence and came to a quite different conclusion. They
discounted all evidence pointing to the fact that a re-organized keyboard
could be more efficient as 'biased' but do not point to independent trials
that found QWERTY better.

The most obvious explanation for this is that the obvious costs of
retraining the typists compared to the possible advantage meant that nobody
thought it worth bothering to even *try* to break the QWERTY dominance.
Psychological foreclosure can often be effective as the real thing. When
everyone thought Apple was a gonner for sure the software houses deserted
the platform in droves. It took the return of Jobs to give Apple a chance of
avoiding chapter 11.

The other effect of risk of foreclosure is the principal driver in the
Internet industry. The risk of lock in is so clear that customers,
particularly enterprise customers look to avoid it at all costs. To sell to
an F500 company you have to generally fill in a 30-100 page RFP which
essentially boils down to 'does it do what we want' and 'will it lock us
into a proprietary product with high switching costs'.

Linux exists because of the fear of lock in. So for that matter does
Windows. It was the fear of OS/2 welded to proprietary IBM hardware that
forced the industry to adopt Windows in the first place.

That illustrates a second higher order 'lock in' effect, channel conflict.
The effects of vertical integration are obvious, so market dominant
suppliers in one market look to prevent a competitor gaining vertical
integration.

To the extent that the Independent Institute have a point company
strategists look to prevent a 'lock in' effect occurring. In most cases they
are successfull. The QWERTY parable is a vast simplification of what goes on
in the real world. But don't imagine for a second that the 'it does not
exist' fable they are attempting to peddle is true either.


	Phill

> -----Original Message-----
> From: James A. Donald [mailto:jamesd at echeque.com]
> Sent: Sunday, March 04, 2001 12:30 AM
> To: Phillip Hallam-Baker; 'Declan McCullagh'
> Cc: 'Paul Spirito'; 'Matthew Gaylor'; fight-censorship at vorlon.mit.edu;
> cypherpunks at cyberpass.net; CYBERIA-L at listserv.aol.com; 'Colin
> A. Reed';
> 'Ken Brown'; 'David Theroux'
> Subject: RE: Independent Institute Response To Phillip Hallam-Baker
> ("network externality")
>
>
>      --
> At 06:05 PM 3/3/2001 -0500, Phillip Hallam-Baker wrote:
>  > Also the fact that economists generally still appear to give the
>  > QWERTY story credence may indicate ignorance or may simply
> mean that
>  > they reject the L-M hypothesis.
>
> I am unaware that economists continue to give the QWERTY
> story credence,
> and do not believe it.
>
>      --digsig
>           James A. Donald
>       6YeGpsZR+nOTh/cGwvITnSR3TdzclVpR0+pr3YYQdkG
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>       4QeDuOI+UPftf4COJUcvz0W4VS2Ww0dCYmA2eTF4H
>
>