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Feng Zhu Harvard University

Comments on Liu, Kemerer and Smith’s “Standards Competition in the Presence of Digital Conversion Technology: An Empirical Analysis of the Flash Memory Card Market”. Feng Zhu Harvard University. Overview. Motivations Why is there no standardization in the flash memory market?

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Feng Zhu Harvard University

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  1. Comments on Liu, Kemerer and Smith’s “Standards Competition in the Presence of Digital Conversion Technology: An Empirical Analysis of the Flash Memory Card Market” Feng Zhu Harvard University

  2. Overview • Motivations • Why is there no standardization in the flash memory market? • What distinguishes the flash memory market from other similar markets? • Empirical Results • Positive association between prices and installed bases • Adoptions of converters reduce price premium for the leading formats than that of the minority formats • Market concentration decreases with adoptions of converters

  3. Strengths • New industry • Great dataset • Monthly sales and prices data for different flash formats and converters • First empirical study on the effect of conversion technology

  4. Network Effects • Sources of network effects • Exchange content with other consumers • Reuse the same flash memory in the next digital device • Manufacturers want to make their device compatible with the standard with a large market share • Converters help avoid the tendency towards standardization • Are network effects strong? • What is the mechanism in which converters help avoid standardization? • Consumer multi-homing?

  5. Empirical Results • Relationship between price and installed base • Network effects • Economies of scale

  6. Empirical Results • Measure for market concentration (capacity, size, read/write speed) • Casual relationship

  7. Possible Future Work • Relationships among memory makers, and between memory makers and device makers • Why are some flash formats losing market shares?

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