Wednesday, June 18, 2008

Econ 101: Network Externalities and Switching Costs - or - How I Learned to Stop Worrying and Love the Mac

It all began with an Apple IIe upon which I programed a stupid animation of a duck kicking an egg. Then, in college, my brand new typewriter was immediately mothballed once I was shown the Mac labs in the basement of the dorms. Soon I owned one, then a PowerBook and finally a PowerMac that I bought upon starting my PhD. But it was soon over as economics was entirely PC and switching platforms got to become too burdensome. I was consumed by the evil Microsoft empire and have been a slave to PC ever since even after Macs got better and platform switching become a snap.

Economists call the two things that kept me enslaved network externalities and switching costs. Network externalities are when the value you get from using a product goes up the more that other people use it (and vice versa). So, since I was in economics and everyone used PCs, the value I got from PC usage went up and Mac usage went down. Thus I went to PC. Switching costs are just that, the costs you incur when you switch from one product to another. In my case, some software adjustments will have to be made and, more importantly, I have to retrain myself to do some things that I now do without thinking.

So what happened? Well with increased ease of moving across platforms and with the increased popularity of the Mac (including some of my colleagues) the network externality angle has lessened a lot. Switching costs have diminished as well thanks to USB ports, flash drives and Macs ability to link with Mac or PC networks (like I have at home).

And so it is that I have finally come back home to Mac. I am as giddy as the day I brought my first Mac home (a Mac SE - the IIe was a childhood friend's). Here is a picture of the beautiful little guy. A computer on which I wrote my first e-mail. Ah nostalgia. Anyway, I am now fully committed to making the complete transition over time and you know what? It feels fantastic!

So this, my dear readers, is the first blog post from the new MacBook Pro. Enjoy.

UPDATE: I do have one disappointment: in the old days when I used to start up my Mac, it would smile at me. It doesn't do that anymore...


Dann Cutter said...

Ah... another one back in the fold.

Just a heads up... as well as being a student at OSU, I am also the IT Manager out at Hatfield - and an avid Mac user. Thus I am pretty familiar with the Mac's usage issues across the University.

All that is to say - if you run into any problems (like, install Firefox... Safari is great, but you'll need FF from time to time), or are curious about some of the software solutions, feel free to gimme a holler.

- dann

JP Cull said...

As someone who reads this blog for the truth, I'm kind of shocked you didn't explain that "switching" back to a mac isn't really "switching" anymore. Inside your new MBP there's pc hardware, no different than any other manufacturers proprietary notebook hardware. There's an intel chip, an nvidia chip, and I'd guess a toshiba harddrive. Buying an apple used to mean buying somewhat different hardware. All that switching entails now, is software related, and with paralells, bootcamp, and crossover, getting the software right isn't much of a challenge. As someone who bought an MBP to play windows games, and as someone who recently spent a month talking about product differentiation, it seems to me that the differences between "pcs" and "macs" are largely superficial. Sure the costs have gone down, but at the price of the product actually being different. Which gets me wondering why in the world apple thinks they can charge $2799 for a mac pro, but I guess that's another article.

Patrick Emerson said...

You got me JP, the guts are essentially the same. I suppose it is really the operating system that is different. Can you now install OS X on a typical Windows machine? Apple's strength has always been in software - but the hardware is pretty cool too.

On the other hand the fact that the processors are the same must partly account for the ease of sharing files across platforms, no?

Anyway, I know that for serious gamers, Mac is not the answer ;-).

JP Cull said...

Yeah that was really my point: you can install OSX onto any newish pc, just like you can install windows, or linux, meaning that the hardware is similar enough. Though, it is currently not legal to install OSX onto non-apple hardware, leave it to the internet to find a way around that. If you are interested in the process, just do a google search on OSX86.

As per file sharing, I don't have the technical knowledge to explain for sure but I would guess it has to do with the file system (part of the software layer). I would imagine that since OSX is based on unix, and unix has been talking with windows a long time it was an easy transition?

Patrick Emerson said...

Well I am not very tech savvy which is probably the appeal of Mac. Or perhaps I am just a sucker for clever marketing. I am cooler now that I have a Mac, aren't I?? Just wait until I get my iPhone...

In all seriousness, I think one of Apple's true strengths has been designing machines that users develop a true emotional attachment to. I loved my old Macs, my This is one reason I really miss the old smiling Mac at startup.