Problems and net work effects between different IM systems.
In 2006, the US market for instant messaging (IM) was dominated by AOL (w/ 56% users), followed by Microsoft's MSN (25%) and Yahoo (19%). Despite rapid growth and rosy forecasts, the market is held back by the lack of interoperability among the different IM systems. In Aug 2005, Google launched Google Talk, an IM and voice communications service. Two months later, in a radical change of strategy, MSN and yahoo arranged to make their IM systems interoperate by mid 2006.
(a) Use IM to explain the concept of network effects.
(b) Elucidate the critical mass problem which Google talk must overcome.
(c) Suppose that AOL's users are older and less technically savy that users of MSN, Yahoo, and Google. Illustrate the decision by MSN and Yahoo more likely directed at Google or AOL?