Unit 3 Quizzes

When a firm makes its technology open, which of these is true? A) It increases competition and may make that firm worse off. B) There is potential for increasing complements that can benefit the firm. C) The technology can become industry standard. D) All of these

D) All of these

Which of the following is most likely a benefit to adopting an open product strategy? A) Less competition B) More profit C) High development costs D) Speed to market

D) Speed to market

What impact does an open product strategy usually have on a product's profits, when compared to the profits of a product with a controlled strategy? A) The profits potential for an open product are usually stable for one year, then suddenly double B) The profits potential for an open product are always greatly increased C) The profits potential for an open product should increase moderately overtime D) The profit potential for an open product will be lower

D) The profit potential for an open product will be lower

When is a product focused on performance? A) When it has a similar look, feel, and function to other products B) When it has evolved into the next generation of an existing product C) When it can connect to or use the technology already in existence D) When it has a significant performance improvement

D) When it has a significant performance improvement

Two-sided markets will exhibit an affect where if one side increases or decreases, so does the other side? A) Same side network effects B) Cross network effects C) Dynamic effects D) Cyclical-network effect

B) Cross network effects

When a firm opens a technology to others to develop only the complements, which of these is true? A) The ability to gain market share is harder B) Market share of the technology may increase C) This may potentially create greater risks of cannibalization D) None of these above are true

B) Market share of the technology may increase

Performance play implies which of these? A) A firm makes its technology open and provides great performance B) A firm keeps control of its technology and provides compatibility C) A firm keeps control of its technology and provides high performance D) A firm makes its technology open and offers complete compatibility

C) A firm keeps control of its technology and provides high performance

The Mac's market share continues to increase each quarter, although it has been flat the last few quarters. Ignoring brand issues, how do you explain the dramatic increase in market share for Apple's Mac over the last 10 years? Use network strategies or other principles and concepts to explain this growth.

1. Apple moved to the Intel processor in 2006 for its Macs. This change brought compatibility to Windows and lowered the switching costs for users from Windows. Apple benefited from the better Intel processor that was used in the PC. 2. Apple stores were hugely successful at attracting new customers with unique product features like the iPod, iPhone, and iPad. 3. Apple focused on developing its platform around iTunes and the iOS where there are large numbers of complements such as music, games, movies, books, and applications. The platform attracted large numbers of customers with significant lock-in. The products were 'open' to develop a large number of complements on its iOS. 4. More and more applications moved to the web and users only needed a browser to access those applications. This move increased the appeal of the Apple product to other users. 5. Apple introduced products that fundamentally changed an industry with every new release. The iPod changed the music industry by unbundling CDs. The iPhone fundamentally changed the network industry and device makers by introducing multi-touch screens through devices that could make voice calls, surf the Internet, access emails, take pictures, send messages, and play games. The iPhone also changed who controlled customers. The iPad changed media, gaming, and book industries. Note that any TV that Apple will introduce is likely to change the cable business. 6. Apple has an unrelenting focus on the customer experience.

Which statement best describes a platform? A) Architecture that improves in performance with each development cycle B) Software or architecture that allows other applications to be written on it C) A compatible system that other programmers can take apart and re-mix D) A proprietary system strategy for technology products

A) Architecture that improves in performance with each development cycle

What was the strategic affect of Apple switching the Mac to an Intel processor for Mac users? A) This allowed Apple hardware to run Windows, lowering switching costs for PC users B) It was mainly to increase performance since Intel is better C) It allowed them to reduce the compatibility and increase uniqueness of its products D) None of these

A) This allowed Apple hardware to run Windows, lowering switching costs for PC users

How do you know if a product has an open or controlled product strategy?

An open product strategy does not necessarily mean "open source." Openness refers more to whether you will give up some level of control to allow people to interact with your product or build complements that can integrate with it. The open approach, because it is open and easier to integrate with, tends to see more adopters and growth. The IBM Windows Compatible PC and the Android OS are both examples of products that focus more on openness. The opposite of openness is closed, also known as a controlled strategy. This controlled strategy is a proprietary strategy where you choose to control the entire product. You don't license your technology for others to build with it; you choose to be the one who builds and controls the user experience. For example, Blackberry and Apple both control their operating systems because they are the only ones that build and maintain them. The controlled approach can be riskier when starting out because growth is harder, especially in the presence of a more open, competitive product. However, if the network effects are great enough, it can be highly profitable.

How has personal computing evolved from the 1980s to present day? Consider each decade: 1980s, 1990s, and present day.

Even if Apple's product strategy hasn't really changed, the market has. The market has evolved as well as the way you utilize the product. If you go back to the 1980s, it was a standalone computer in a non-networked world used for personal productivity, usually used by businesses, or in some cases, higher education. That was the product. But today, the product is in the networked world. It's in the mobile world. It's not only used for productivity, and it's not only a consumer product. It is a lifestyle product. Your photos, videos, books, everything is on that one device and you can share all of those things at any time. We're living in a mobile world with products that you carry everywhere and that define you and your lifestyle. In education, you can find kids in kindergarten to adults in higher education using these products. The product has fundamentally changed from a focus on personal productivity to a lifestyle choice product. The consumption behavior has also changed. To a large extent, Apple has done a remarkable job at actually transforming your individual productivity tool into your lifestyle choice tool. The underlying things that have changed are the ones that make Apple a very powerful company today.

Explain why Apple retail stores are a success today.

Even though other retail stores have failed for companies like Gateway, Apple has purposely created unique products that create curiosity in its customers. The iPod has the control wheel on the front. The iPhone removed the keyboard entirely and used the screen to show a digital keyboard, which expanded the screen size allowing for entirely new uses for the iPhone, like increased web surfing and media consumption of books and movies. Apple also releases products more frequently than it did long ago, creating constant buzz about the new version of whatever product they are going to release. This is compounded with Apple's tendency to be very secretive. The unique features and the buzz around releases creates a genuine curiosity in consumers who can then go to the stores and observe the products first hand. The ability to see, touch, and play with new products makes the retail store a valuable asset to Apple.

Identify reasons why Apple's market share rapidly declined in the late 1980s and early 1990s.

IBM PC architecture was made open and this attracted a number of competitors to clone (e.g., Dell, Gateway, Compaq, Packard Bell, etc). This competition lowered prices and increased quality that expanded the market quickly. As installed base increased, it attracted many independent software vendors to develop complements (e.g., productivity tools, such as Lotus 1-2-3 and Wordperfect, and business applications). The extensive complements expanded the market dramatically. Some of the products for PCs had network effect (like Wordperfect) that attracted more users as prices began to fall. Because Apple was expensive and had fewer complements, the industry gravitated towards the PC market. Meanwhile, PCs became very modular, where each component improved in performance and lower prices over time. The performance of the Intel processor grew much faster than what Apple was using. And, the performance of PCs improved much faster than that of Apple, even though Apple had a better OS. Lack of complements, higher prices for Macs, higher performance of PCs, open IBM architecture attracting competitors, and large network effects resulted in lower market share of Apple.

What were the strengths of Apple's products in the 1980s? What are the strengths of Apple's products in the 2000s? Are there major differences between Apple's products from these two time periods?

One key thing Apple wanted in its products was ease of use and the concept of plug and play. You can take the product out of the box, plug it in, and start using it. It also has remarkable industrial design that nobody in the industry had. Apple spent a lot of money on research and design. They also had incredible buyer loyalty and a niche brand along with a proprietary system and a premium product with tremendously high margins. You see some people saying, "Oh, Apple is not the same old company. It's a new company." Really? Let's look at it today. Ease of use is still important, and no company beats them in ease of use. Even a small child can use an iPhone. It's still plug and play as well. It still has industrial design. It's a premium product, meaning it has premium pricing with high margins. Unique design? Yes. Are they spending on research and design? Yes! Then what was different from 1980s to today? Exactly the same strategy has been followed: being a premium product with a great user interface and a plug and play model.

What are the different entities connected to the Mastercard platform?

The Mastercard platform connects banks, retailers, and consumers.