Linux vs. Windows in the Middle Kingdom: A Strategic Valuation Model for Platform Competition

摘要

This paper examines factors at work when an established standard competes with an open-source offering. Although the argument is often framed along price or technical features, these aspects may describe only a portion of the consumer's adoption calculus. Modeling the consumer's technology platform adoption decision is critical to developing market preservation for incumbents and market invasion strategies by rivals. This paper proposes a theory grounded, quantitative model for technology adoption in the presence of network effects, switching costs, and software piracy. We apply the model as a strategy development and market analysis tool to the context of the Linux market in China. A series of strategies for the new rival, as well as strategies for the incumbent, are presented. Findings from this study suggest approaches not only for the context at hand, but also for other scenarios where open-source, network effects, software piracy, and extreme income variances exist.