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To: mark who wrote (1766)	9/7/1999 5:29:00 PM
From: Frank A. Coluccio	Read Replies (1) \| Respond to of 15615

You're quite welcome, Mark. You had trouble with the useit link? I just tried it and it worked fine. Anyone else have a problem with this link: <?> useit.com In case you are still having a problem, here's a brief review of the more salient points of Metcalfe's Law, shown below, from that same link. Regards, Frank Coluccio ----------------------- From the above url: Attempts to build walls around isolated sites will fail in the long term because of Metcalfe's Law which states that the value of a network grows by the square of the size of the network. So a network that is twice as large will be four times as valuable because there are four times as many things that can be done due to the larger number of interconnections. Because of Metcalfe's Law, the largest network always wins over smaller networks, even if the smaller network has some larger initial value due to some special-purpose feature or benefit. As the networks grow, the square factor ultimately tips the hand in favor of the large network. And since the Internet is the largest network of them all, it will ultimately win over any proprietary network. Metcalfe's Law provides much of the explanation of the success of the Web relative to earlier hypertext systems like HyperCard, Intermedia, and NoteCards. They were all much better than the Web and had features ten years ago that we are still sorely missing on the Web. But the Web was universal and the other systems were proprietary. You know who won. The law is usually quoted in terms of growth of the network, but we can run Metcalfe's Law in Reverse and use it to characterize the effect of cutting a network into pieces: The value of partitioning a network into N isolated components is 1/N'th the value of the original network. This new law follows directly from the original Metcalfe's Law. Each of the new components has a size of 1/N'th the size of the original network. Thus, its value is 1/(N2) of the original value. At the same time, there are N of these new mini-networks, so the over-all value is N * 1/(N2) = 1/N The value of the full Web is currently about $300 Billion according to an analysis published by Cisco. In three years, the value will likely be around $1 Trillion. Let's assume that the various attempts to split the Web succeed to the extent that it is split into 5 parts soon and 10 parts in three years. The current value of the Web would be reduced from $300 Billion to $60 Billion - for a loss to society of $240 Billion Each of the current "mini-nets" would be worth $12 Billion The future value of the Web would be reduced from $1 Trillion to $100 Billion - for a loss to society of $900 Billion Each of the future "mini-nets" would be worth $10 Billion The short-term interest in partitioning the Web lies in the hope of gaining supreme dominance of one of the resulting mini-nets. Capturing most of $12 Billion can surely be more attractive than capturing a small part of $300 Billion, even if your actions lead society as a whole to lose $240 Billion. In contrast, the long-term prospects of proprietary strategies are dim, with the value of each mini-net dropping over time from $12 Billion to $10 Billion. Example: Proprietary Instant Message Services Let us use the Reverse Metcalfe's Law to analyze the potential impact of a proprietary communications system for AOL. Assume that AOL succeeds in capturing 20% of the world market for Internet services. Further assume that the remaining 80% of the market can agree on a single, open standard (hopefully one defined by the Internet Engineering Task Force). Relative to the theoretical value of a single, universal network, we find: The value of AOL's share is 0.22 = 4% The value of the other companies' share is 0.82 = 64% The loss due to the partitioning is the remaining value that is captured by nobody: 100% - (4%+64%) = 32% In other words, AOL ends up owning a 4% share (which could be worth a good sum, of course) and a third of the full potential is simply lost to society. In contrast, assume that AOL joined in the single open standard and then succeeded in capturing the same share of the new value as the hypothetical 20% I have assigned as its over-all share of the future Internet. Then AOL would realize five times as much value as they do under the proprietary scenario. The only downside is that they would have to compete on quality of service to win their 20% share instead of simply being guaranteed a proprietary 4% share.