Hardware Startups Pursue Network Effects

Apple customers are famously loyal to the brand. But deep down, a lot of them may be just practical. They know Apple's products will all work well together. That single attribute has helped Apple defend its turf from hordes of would-be competitors. Some liken it to the network effect that has made social media firms like Facebook so popular.  

A new generation of hardware startups is hoping to benefit from a more direct version of network effects, by devising ways to make their products more useful the more people use them.

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Athos. Athos founder Dhananja Jayalath says his company is using the data it gathers from customers to perform what amounts to research studies on biomechanics, which means the gear will work better as more customers use it. Mr. Jayalath says that the data gathered from users will help defend the company from would-be rivals.

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To build the critical mass of customers necessary to create a network effect, hardware startups face an uphill battle.