Bandwagon Effects in High Technology Industries by Jeffrey H. Rohlfs

by John Biggs


On the Wagon

Reading Jeffrey H. Rohlfs’s book, Bandwagon Effects in High-Technology Industries, made me feel like one of the bored British grade school kids watching John Cleese have relations with his wife in Monty Python’s Meaning of Life. In both works, what could have been a scintillating experience in any other context was drained of life and passion by odd pacing and an attention to all the wrong details.

That is not to say that Rohlfs’s short book is all bad. Just like Cleese’s naked bottom, this book is pockmarked with occasional insights and has a strong premise. Obviously, Cleese’s bottom lacks the latter aspect, but you know what I mean.

cover art

Bandwagon Effects in High Technology Industries

Jeffrey H. Rohlfs

(MIT Publishing)

The “bandwagon effect,” as any fan of Napster can tell you, occurs when an innovation follows the “hockey stick” graph: slow growth in the first few months followed by a massive spike due to the growth of perceived utility in a population. It’s why folks dumped millions into the stock market. They saw that their friends and neighbors were raking in the dough, and they figured they, too, could see a piece of that action. In this way, the stock market followed other great bandwagons including AT&T’s Picturephone, the Beta videocassette format, and Kula Shaker.

Overall, however, Rohlfs’s book is a scientific look at popularity. The jocks in high school weren’t cool because of any overt reason. They were cool because all of the other kids, including all the cool girls, thought they were cool. That’s why you weren’t cool: you got in on the whole cool/uncool too late. The cost of entry goes up as the acceptance rises, meaning Can’t Buy Me Love and all those other teen movies were lying to you.

Ultimately, it all boils down to Metcalfe’s law, which states that the value of a network goes up as the square of the number of users. A world where only two people have telephones is pretty useless. A world where a million people are all connected to a central telephone exchange is a gold mine.

Rohlfs, who teaches and Stanford and received his doctorate from MIT, has made a living telling this to people. From his days at Bell Labs where he convinced the company to invest in optical cable, to his current work at Strategic Policy Research, Inc., Rohlfs is all about looking for the next hockey stick on the horizon. His book discusses a few bandwagon items, including the internet and the compact disk, and he often gleefully points out that Microsoft was “just a small software house in Washington” before they chewed up the world, riding the hockey stick for all it was worth.

The book is for economists. It gives an introductory look at Rohlfs’s pet research project, the growth of telecomm networks, and then goes into some interesting detail before petering out with a half-hearted look at the operating system wars and a chapter dedicated to graphs. No big finish here.

It’s an important book in that it takes a calm, measured breath and describes the source of bubbles and “irrational exuberance.” It’s a bad read because it rarely comes up for air after the initial effort and loses you in details you don’t need to know (for instance, CDs were made so they fit two-for-one in the slots designed for old vinyl LPs, believe it or not.)

Don’t rush out and buy this book, but become acquainted with its premise: that popularity is not arbitrary and once it starts building, there’s no stopping it.

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