In class we have discussed network effects, basically meaning that people derive more value from certain products, such as technology and social networks, when more people are utilizing that product. A prime example of such a product that has been developing in recent history is the cell phone. The article “Watch The Incredible 70-Year Evolution Of The Cell Phone” shows how cell phones have changed over time. Originally, cell phone technology was not especially advanced and prices were prohibitively high.
Since not many people owned cell phones, buying them made little sense to individuals, especially as the price was so high that it often outweighed the benefit people received from the product, both inherently and from the number of users. However, improvements in cell phone technology led to new activities such as texting. This development led to an increased benefit in having a phone when many people did, since texting could only be completed using a cell phone. Prices lowered so that many people were now able to afford phones and considered the benefits to outweigh the cost. The fraction of people who owned cell phones moved past the tipping point, and suddenly cell phone growth spread rapidly through the population. Now, it is actually far more unusual to encounter someone without a cell phone than with one.