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Summary IT Economics van Leo Van Hove - Deel 6/6
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IT Economics van Leo Van Hove - Deel 6/6 Chapter 5 : Switching and lock-in
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Chapter 5 Switching and lock-inThe launch in 2012 of Windows 8 was a major chock for users. Complete different layout.
“New Coke” story: Around 1985 , Coca Cola changed the formula for coke. They made Coca
Cola more sweeter because Pepsi was. It is a term used for a failed strategy.
Relearn how to use windows => Learning costs as example of switching costs
Many people do not want to invest in a day…. User inconvenience and learning costs
They needed to screw the decision back for the long term users.
Fadia Farhat | VUB 2023-2024 111
, Costs of switching IT = costs of the software + infrastructure costs + training costs
When you have high switching costs, consumers can be locked in. Higher prices can be
requested to weakened captive consumers.
Switching costs refer to the costs or barriers that a consumer or business faces when switching from
one product, service, or brand to another. These costs can be financial, time-related, or involve
the effort required to adapt to a new product or service.
Left side : more formal explanation. It is like you have two prices. Initially you have the price of the
good, but when you want to change, you have the price of the new good + switching costs.
This create brand loyalty (positive term) or lock-in (negative term)
Right side : on exam you should specify: lock-in because of….. (one of those 7 terms)
Knowingly and willingly lock-in yourself
Contractual commitment and damages for breach of contract.
Contractual commitments can act as switching costs by creating legal and financial obligations
that individuals or businesses must consider when contemplating a change of provider or service.
These commitments add a layer of complexity and cost to the decision to switch and contribute
to customer or client stickiness.
Fadia Farhat | VUB 2023-2024 112
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