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

Objectives of the Study The purpose of this thesis is to evaluate the switching costs while adopting a new mobile platform and examine the network effects on the user switching behavior of the mobile platforms. In addition, this thesis examines whether it is more difficult to shift to a new cloud service provider or mobile platform. Windows, Android and iOS are the three platforms that are analyzed in this study. Academic background and methodology To achieve the purpose of this study the qualitative research technique involving focus group interviews was utilized. The background literature outlined current understanding of the switching costs and divided them into five categories: search costs, costs of transaction, learning costs, complementary investments and brand relationship costs. Additional concepts were defined to get better understanding of the network effects, cloud services and mobile platforms. Three largest mobile platform providers, Microsoft, Apple and Google were analyzed using the (IISIn) model. The impact of the switching costs and network effects was analyzed from the user’s perspective through four different focus groups with participants from different professional occupations. Thereafter the interviews were transcribed and qualitatively analyzed. The results of this study are presented in the form of propositions that can be tested in the future research. Findings and conclusions The research shows that the most prominent barriers when adopting new mobile platforms are: time and effort required to learn how to use the new platform, loss of non-transferable goods and services, and emotional attachments to the brand. Furthermore, user’s social circle, for example family and friends, play an important role in pre-adoption decision because of recommendations through word of mouth. Members that live in the same household might adopt the same mobile platform due to greater product compatibility. The high number of application developers in a platform is crucial to retain consumers in the post-adoption phase. Specifically, lack of available applications is one of the primary causes for negative user experience that can lead to switching. Finally, there is no consensus among users if switching mobile platform is harder than switching cloud service provider. There are multiple user characteristics that determine the outcome: extent of use of the cloud services, knowledge about converters to transfer data between cloud providers and monetary investments made into a mobile platform.