Reading: Information Rules: A Strategic Guide to the Network Economy
From Software Business Community
Information Rules: A Strategic Guide to the Network Economy
Authors
Carl Shapiro
Hal R. Varian
Summary
Summary from the authors:
"Information goods—from movies and music to software code and stock quotes—have supplanted industrial goods as the key drivers of world markets. Confronted by this New Economy, many instinctively react by searching for a corresponding New Economics to guide their business decisions. Executives charged with rolling out cutting-edge software products or on-line versions of their magazines are tempted to abandon the classic lessons of economics, and rely instead on an ever-changing roster of trends, buzzwords, and analogies that promise to guide strategy in the information age."
"Not so fast, say authors Carl Shapiro and Hal Varian. In Information Rules, they warn managers, "Ignore basic economic principles at your own risk. Technology changes. Economic laws do not." Understanding these laws and their relevance to information goods is critical when fashioning today’s successful competitive strategies. Information Rules introduces and explains the economic concepts needed to navigate the evolving network economy."
Why is it recommended?
This is the first book to relate strategic management in the information industries to the underlying economics principles. Like all books from Harvard Business School Press, it is written for the benefit of the practitioner and manager rather than researcher per se, which makes it a good introduction for non-economists. The primary focus is on information goods, rather than software goods, but there is certainly a lot of overlap. Information goods are usually intermediated by software, so the two are intertwined. The book includes many good examples from the software industry. Although some of the examples are looking a bit dated, the basic principles remain valid.
The following topics are covered very well: price discrimination and versioning, differentiation, network effects, lock-in and switching costs, standards and alliances, information policy.
Citation
Carl Shapiro and Hal R. Varian, Information Rules: A Strategic Guide to the Network Economy, Harvard Business School Press, November, 1998.