Research on Issues of Critical Mass in IT Competition

Information Technology (IT) has a typical characteristic of network externalities. This characteristic makes the IT competition not only depend on its own function of technology, but also on whether the consumer volume can meet the critical mass or not, which will trigger off the mechanism of positive feedback. This paper extends the Ronald Shone´s diffusion model, gives the computing formula of critical mass, and unveils the role of technology´s function, network externalities, and compatibility in IT competition.