Impact of Switching Costs and Network Effects on Selection of Mobile Platforms

Abstract

We study the consumer selection of mobile platforms through switching costs and network effects. We operationalize switching costs using five dimensions (search cost, learning cost, contractual cost, complementary investments, brand relationship cost) and network effects using two dimensions (same and cross side network effects). We draw on four focus groups to empirically address the selection problem and our findings are three-fold. First, we show that complementary investments create strong switching costs through same and cross side network effects. Second, the selection of mobile platform seems to be moderated by brand relationships cost. Third, contractual costs in the form of contracts for carrier-device bundles exhibit strong switching cost for the duration of the contract. However, there is no indication of lasting effect for this switching cost after the contract term ends.