eBay and Metcalfe’s Law
Interesting post by OM Malik claiming that eBay’s earnings miss shows that Metcalfe’s law has its limits.
For those who haven’t heard of Metcalfe’s law, it states that a network’s value scales with the square of the number of users.
So what happens when the number of users stops growing? Does the value of the network keep growing, stop growing, or does it decline?
Now I am going back to college calculus. A dangerous thing to do in public. But I think this means flat user growth is bad news for a network’s value.
Interesting stuff to ponder, particularly if you own eBay, Google, Yahoo!, or any of these "network plays".