Network Effect

By Ramesh Akkineni

Jim Crowe about future of Internet Backbone

At the same time, a world of lightning-fast innovation and precipitous price drops is a world in which the winner takes all. The technology leader has the lowest costs and, therefore, the lowest prices. That brings more traffic, which cuts costs, which reduces prices, which brings more traffic, and so on. "We watched it with Intel and microprocessors," Crowe says. "We watched it with Dell and computers. Sooner or later, somebody is going to end up with 70, 80, 90 percent of the Internet backbone. How that happens is always tough to describe, but it'll happen. You can show mathematically that one company will get supernormal market share. It's a network effect on steroids."

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