A corporate strategy article by Thunderbird students Leah Burdick, Ilan Fehler, Nicholas Kincaid, Peter Klein and David Ryan
More so than traditional businesses, online businesses have the distinct advantage of acquiring more information about their customers. The more that is known about online users’ habits, needs and preferences, the greater the value that is derived from that relationship, as the businesses are better able to cater to the needs of those online users. An online network, a system of users, is enhanced not only by the relationship the business has with the user but also by the relationships that the users have with one other. Take the telephone for example. If you were one of the first three people to own one, you could only call the other two. Fortunately, today millions of people have access to telephones and anyone of them could theoretically call any other one. Therefore, a network of users derives greater value through the network’s size and ubiquity — the larger the network, the greater the value to both businesses and consumers.