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BM2207 Economics of Digital Business (PRD2 A 2024/25)

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Amazon launched in 2007 the Kindle ebook reader device and Kindle online bookstore. Kindle devices were deeply integrated with the functionality of the Kindle bookstore and were incompatible with the books purchased from competing digital bookstores. The choice to make Kindle devices incompatible…
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Nintendo’s 8-bit console, the NES (Nintendo Entertainment System, or Famicom in Japan) achieved a high adoption rate in many markets during the 80s. In the years following the console’s launch, the catalog of exclusive titles for the console grew and technology improvements made possible the production of competing consoles with superior performance. To protect its dominant position in the market, Nintendo should
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Launching a service for businesses (B2B) as a limited public beta that requires prospective customers to sign up and await in line before being able to use and pay for the service can be an effective strategy to
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Consider an industry where firms face a temporal delay when expanding their capacity. For example, cloud computing providers that rely on the supply of custom components, or airlines given that new airplanes can only be purchased by placing orders in advance. An unexpected expansion of demand in this industry
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Generative artificial intelligence, a technology exemplified by ChatGPT and other services offered by OpenAI, is a general purpose technology with multiple applications. This type of technology creates opportunity windows
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box and PlayStation are incompatible videogame platforms because users of one console cannot play games sold for the other console. If an adapter appears in the market which renders both consoles compatible:
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The fact that Microsoft designs new versions of Windows to be compatible with software developed for older versions allows it to sustain higher prices for the new versions because:
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Amazon Web Services invests aggressively to expand its datacentre capacity as the demand for cloud computing services grows. This investment can likely be explained by the fact that…

(I)    

Having

a larger installed capacity than competitors enables Amazon to operate with a

cost advantage, increasing its profitability.

(II)   

Having

a large capacity in relation to the size of the market ensures Amazon is one of

the few active players in the long run, increasing its profitability.

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The evolution of mixed reality devices such as Meta Quest or Apple Vision has the potential to become a general purpose technology because
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When launching the iPod music player and the iTunes music store, Apple deeply integrated the functionality of both but allowed consumers to use their iPods to playback unlicensed music not purchased from iTunes or other digital stores. This choice…
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