Using Game Theory to Optimize the Pace of New Technology Adoption
Any system in which users must combine components from multiple, independent providers to enjoy the full benefits from a product or service forms a Hardware-Software Game.
The Hardware-Software Game provides strategies for system players to
- Increase the pace of system adoption
- Increase system value
- Increase value extracted by key players
Specific applications of The Hardware-Software Game include, for example,
- Communications Systems: Cell/smart-phones, TVs, gaming systems, electronic medical records (EMR) systems, etc.
- Transportation Systems: Cars, trains, ships, planes, etc.
- Platforms: Vendors, social media, matchmakers, etc.
- Devices: Fitbit, industrial machinery, IoT, etc.
Quantaa principal, Ruth Fisher, PhD, wrote the First Edition of the book in 2009. The book includes all the basic information you need to know about how systems work to attract users and create value. She recently released the Second Edition in 2017. The new edition updates the examples and supplements information on networks and platforms. As systems become more complex, information covered in The Hardware-Software Game becomes more relevant and necessary for systems success.
A chicken-and-egg problem occurs when systems innovators introduce hardware components of new hardware-software systems into the marketplace, but adoption is held-up, or delayed, by users who refuse to adopt the new system until there is enough content available to go with the hardware, while software providers refuse to supply content until enough users have adopted the new system and can access the content. The author refers to the dynamics during the adoption process of new technology systems among hardware suppliers, software/content/accessory suppliers, and users as the hardware-software game.
This book offers a systematic analysis of the hold-up problem in adoption of next generation hardware-software systems. The analysis combines aspects of sociology, business strategy, and economics to examine the underlying dynamics of the adoption process, and it offers methods by which systems innovators can provide incentives for content providers and systems users to adopt next generation systems sooner than they might otherwise be led to do.
Topics covered in the book include:
- Discovering the forces that drive or delay adoption by users and content providers
- Understanding networks, network effects, switching costs, technology compatibility, and other crucial issues
- Speeding the pace of adoption, and getting to the “tipping point” sooner
- Clarifying and restructuring the incentives that motivate users and software providers
- Engineering new systems to maximize the likelihood of adoption
- Creating expectations of adoption and decreasing the relative value of older systems
- Learning from Apple Newton versus Palm Pilot, HD DVD versus Blu-Ray, and other
significant technology battles
- Leveraging lock-in, path dependence, standardization, and first-mover advantage
Book includes 95 Figures and Illustrations!