Standards Competition in the Presence of Digital Conversion Technology: An Empirical Analysis of the Flash Memory Card Market

Both theoretical and empirical evidence suggest that, in many markets with standards competition, network effects make the strong grow stronger and can “tip” the market toward a single, winner-take-all standard. We hypothesize, however, that low cost digital conversion technologies, which facilitate easy compatibility across competing standards, may reduce the strength of these network effects. We empirically test our hypotheses in the context of the digital flash memory card market.