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andy-smith

Andrew Smith

Distinguished Engineer and Chief Architect for Cable MSO Networks of Juniper Networks

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What do you do when you run out of customers?

March 16, 2015

My colleague, Ben Baker, is intrigued by “the network effect” and shares his thoughts on what that means for the IT kind of network.

My colleague, Ben Baker, is intrigued by “the network effect” and shares his thoughts on what that means for the IT kind of network.

A few months ago I wrote about the network effect and how it explains at least part of Facebook’s value as a company. I recently stumbled upon a graphic in The Economist that pretty much sums up the network effect and it made me think more about what it means for the network:

The blue line tracks the number of members on the professional networking site LinkedIn since its launch while the red line tracks the market cap (value) of the company. See a correlation? I imagine you could create a graph that shows similar results for every other Web 2.0 company.

We are fortunate to work in an industry where our product (networking equipment) directly results in economic value for customers. Simply connecting people creates value. It’s not only a law of economics, but it’s also backed up by real world data. Not a bad sales pitch: “Buy our routers and switches, connect your user base securely ... we’re pretty sure the value of your firm will increase.”

Another thought after looking at this graphic is, what happens next? What happens when LinkedIn runs out of customers? There are only 7 billion people in the world. The blue line has to flatten eventually for every company and then how does the network continue to help them increase their profits and overall value? I’ll offer two answers:

  1. IoT

    First of all, we have far more room to grow beyond connections among merely 7 billion people: excluding PCs, tablets, and smartphones; Gartner predicts that there will be 26 billion connected things by 2020.

  2. Insights from the network

    But we can’t be content with simply connecting people and things. There is plenty of room for network innovation and ongoing efforts to increase the intelligence, flexibility, and openness of enterprise networks continues to create value above and beyond simple connectivity.

This article originally appeared on the Juniper blog.

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