Technology will change, economic laws will not

Abstract: The City of Man, all for the benefit, the shoving of man, all for the benefit. No matter what the beginner of science and technology are, they cannot escape the driving force of economic laws. Carl Shapiro and Google chief economist Hal Varian, co-author of the rules of information, reveal the hidden technology

The City of man is all for profit, and the shoving of man is for the good. No matter what the beginner of science and technology are, they cannot escape the driving force of economic laws. The rules of Information, co-authored by Carl Shapiro and Google chief economist Hal Varian, reveal the economic laws behind the wave of science and technology. A "technology will change, economic law will not", the resounding, the mist to see the moon.

If you want to understand what the Internet means to your business, you can get a lot of inspiration from the establishment of the telephone system hundreds of years ago.

--The Rules of information

The Times in rapid changes, new technologies emerge in succession, and we seem to always be dazzled by the new things led by the nose, is not sometimes, we need to jump off the event itself, to care about some more fundamental laws.

"The Rules of information," said: "The decision to succeed and failure is the implied economic laws, technology will change, economic laws will not." This book, which became the 2000, is not only outdated, but rather a proof of the author's point of view, 13 years later. The author starts with information pricing, and then discusses version partitioning, locking, positive feedback, standard warfare, etc. one by one. A number of vivid examples of it in the book make the original boring theory lively. This book presents some basic laws of the network economy to the readers by combing through some important technical events in history.

The author argues that the "information rules" of the internet world are an extension of the rules that apply to industries with high fixed costs and low marginal costs. This book does not have a lot of new theories, but the author thinks that the development of the information industry is closely related to some of the economic theories extracted, and combined with the corresponding case analysis, and the corresponding countermeasures, it can be said that a combination of theory and practice of the actual Operation manual.

This is an important academic book, although only 300 pages, but in the perspective and elaboration of concise in place, easy to understand, really do not only for beginners, but also suitable for expert research reference.

The book's discussion of pricing strategy and standard warfare is wonderful.

The authors recognize that information products are a high cost of production, low replication costs of products, especially on the Internet, the cost of distribution, the cost is close to zero. Since the marginal cost of information is zero, the pricing needs to be based on its value to the consumer, not the cost of production. On the other hand, in the increasingly fierce competition, its pricing will be close to its marginal cost, which is why most Internet services are free.

In the book, the three levels of price discrimination in the classical microeconomics theory are embodied into three strategies in the information age-personalized customization, version partitioning and group pricing.

Personalized customization: The use of customer information to personal prices to sell personal products, personalization to improve consumer value, thereby creating a irreplaceable unique product. The most successful example of personalized customization is the search engine bidding rankings, according to different advertisers to customer demand, provide different keywords, and through the pricing rankings to achieve the difference between each advertiser price.

Version partitioning: To achieve differential pricing by dividing the product into different versions. Its core is based on consumer awareness of the value of the version of the division. Versions can be divided using latency, interface, resolution, speed of operation, format, capacity, integrity, interruptions, or differences in support. The book introduces various versions of the strategy, of course, do not forget the original purpose, that is, the market segmentation.

Group pricing: For different groups to sell the same product at different prices. Because the same product may be different for different people's value, there is a student discount for a specific group of pricing.

Savor, you will find that these three models really dominate the internet and the various pricing models for software products. Based on these rules you can see the motives behind many pricing strategies. For example, there are so many versions of Windows, the iphone has a 16g,32g version, and the student version is always cheaper.

Another aspect of the thick is the standard warfare. It can be said that the entire history of the Internet, is a standard war history. Because the role of network effect and positive feedback, often is the standard of the world, which makes the standard war into a set of enterprises, technology, politics as one of the complex battlefield. Each contest is full of various alliances, infighting and historical trends, each game can be an epic. The author from a century ago, the power grid standards have been written to Microsoft and Netscape Browser War, spanning hundreds of years, open the big closed, it can fall to the theoretical point, very exciting.

To win the standard war is not easy, the author gives two big basic strategies: preemptive and expected management.

Preemptive strike is easier to understand. As a technology or standard leader, taking the lead in the market and promoting its development is very advantageous to the establishment of its position. Of course, everything is in order to achieve the installation base (Install base refers to the number of critical installation of the network effect) for the purpose, if the first hair is not guaranteed to reach the critical installation base, it is dangerous.

Another interesting strategy is the expected management. An interesting reality in the standard war is that the one who is thought to win will often win (i.e. "expected self-realization"). When people believe that a product or system will dominate, buying or using the product will be more secure. This leads to the possibility that the product will quickly reach its installation base. It is also expected to prevent competitive product sales, thus gaining time for itself. This is why many enterprises do not have substantial sales of products, the reason for large-scale publicity. Who said that "futures marketing" is a new strategy, the book "Steam" well defined the so-called "futures Marketing", he is only one aspect of the expected management. In the presence of the master, "rebels" is only an example that can continue to demonstrate its point of view. We see that every internet big guy is more and more like to come out and make a speech.

Of course, there are many informative cases and wonderful analysis, limited to space and the ability of individual understanding, not for you reader a together, if you want to know this book quo, please read the original.