``Network Effect'' Cited As Critical Factor for High-Tech Firms' Profit and Market Domination in Deloitte Touche Tohmatsu Report.Business Editors/High-Tech Writers NEW YORK--(BUSINESS WIRE)--Nov. 6, 2002 High-tech companies in order to grow, increase profitability and gain market domination, must align their business strategies to maximize the implications of a phenomenon known as the "Network Effect." This marketplace factor is the focus of "Hyper-Growth for Survival," a new research report by the Technology, Media and Telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. (TMT TMT 1 Tarsometatarsal 2 Thermomechanical treatment 3 Treatment, see there ) industry practice and Growth Companies group of Deloitte Touche Tohmatsu Deloitte & Touche (also referred to as Deloitte Touche Tohmatsu, and branded as Deloitte.) is the second largest professional services firm in the world, and one of the Big Four auditors, along with PricewaterhouseCoopers, Ernst & Young and KPMG. . The Network Effect, defined as the tendency of a high-tech product or service to increase in value as the number of users or complementary players increases, has sweeping implications for high-tech companies. The report defines how this factor accounts for the all-or-nothing consequences of firms that manage to either dominate their sectors or fail to gain a sustainable foothold foot·hold n. 1. A place providing support for the foot in climbing or standing. 2. A firm or secure position that provides a base for further advancement. foothold Noun 1. . The report is based on interviews with more than 200 global companies in the consumer electronics, wireless, Internet and e-commerce markets. "Our research shows that global technology is driving the powerful consequences of the Network Effect," says Garry Foster, the Deloitte TMT partner who managed the research. "Several types of Network Effects stem from customer-driven, developer-driven and seller-driven networks. While the source of the Network Effect may vary, the results all demonstrate that savvy business leaders operating in markets where the phenomenon is present must have investment mindsets, performance metrics Performance metrics are measures of an organizations activities and performance. Performance metrics should support a range of stakeholder needs from customers, shareholders to employees [1]. and operational tactics that differ from traditional companies." "Because the Network Effect will allow only one or two players to dominate an entire market segment and capture most of the profits, it is imperative that company leaders carefully examine the extent of this phenomenon and take actions to achieve the coveted cov·et v. cov·et·ed, cov·et·ing, cov·ets v.tr. 1. To feel blameworthy desire for (that which is another's). See Synonyms at envy. 2. To wish for longingly. See Synonyms at desire. stronghold," according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. Igal Brightman, Deloitte's TMT global leader. For a copy of the report, contact tfonseca@deloitte.ca. Deloitte Touche Tohmatsu is one of the world's leading professional services (job) professional services - A department of a supplier providing consultancy and programming manpower for the supplier's products. firms with more than 95,000 people in 130 countries. The Technology, Media & Telecommunications (TMT) group provides world-class expertise and global solutions to clients. The TMT professionals understand the challenges that high-tech companies face and are committed to helping them succeed. TMT administers the Technology Fast 50/Fast 500 programs that recognize the fastest-growing high-technology companies in the world. |
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