250 Technology Competition & Strategy

This course helps you understand business strategies for firms that make technology products, those that feature digital components and network effects. Technology products face distinctive demand-side economic forces (e.g., how value is created) and supply-side forces (e.g., cost structures) which lead to distinctive outcomes and competitive strategies. You will learn from phenomenon and strategies such as: Why do firms in the IT industry give away their best products free? Why is it always ladies-night free (and not men’s) in nightclubs? Why is software typically so defective?

How can a gasoline station manage to charge substantially higher price than an identical one just across the street? Why do makers of video gaming consoles subsidize end users (but tax game developers) while computer operating system makers subsidize software developers (but overcharge end users)? Why did Sony win the Blu-Ray format war against HD-DVD? How should you price a new technology that is far costlier to make than the existing alternative, but delivers higher lifetime value to the buyer? How should you time the launch of multiple versions of a platform good? The insights from this course are valid for technology goods (hardware, software, online information goods, Internet and telecommunications services, consumer electronics, entertainment and media products) as well as other industries that have digitization and network effects, such as health care, banking, services, biotechnology, transportation and energy. The course employs a combination of simple but rigorous analytical models, emerging theories, and plenty of real-world examples, experiences, and formal cases.

Prerequisites: 202A, 203A