Some products generate value only when combined with others, otherwise they have little or no value in isolation (Katz and Shapiro, 1994, p. 93). This is the so-called network effect – the fact that greater consumption of specific products makes them more valuable (Sundararajan, 2003, p.1). Another scientist Leibenstein calls this effect the “bandwagon effect” – “the extent to which the demand for a commodity increases due to the fact that others also consume the same commodity” (Besen, 1999, p.1). The economic basis of network effects has received enormous attention, as it appears to be important for understanding key characteristics of modern high-technology industries (Bresnaham, 2001, p.2). Transportation systems, telecommunications systems, etc. show network externalities, especially the IT market (Lee and O'Connor, 2003, p. 242). Computer operating systems and compatible software are some examples of products that experience network effects. Users prefer to have an operating system on which they can install a large number of applications (Fisher, 2000, p.181). The purpose of this article is to understand how the network effects of Microsoft's products have contributed to its rise and market dominance. To answer this question it is necessary to explain and analyze the following points. First we need to discuss the network industry environment in which Microsoft operates. Furthermore, terms such as “critical mass” and how it is generated; “Tipping points” and their impact on the future of the products, etc. should be described. Furthermore, the strategies and tactics used by Microsoft to maintain its positions in the market should be outlined. The reminder of this... medium of paper... (Economides, 1998). Additionally, Microsoft integrated Internet Explorer into its operating system, with the goal of creating a similar installed base for IE to create a barrier to entry for rival browsers. They moved the competitors' entrance. Furthermore, it is important to remember that “a company like Netscape has less incentive to develop and write software applications if Microsoft can develop its own version of these software applications and bundle them with Windows” (Clements, 2002, 13). The development of Ethernet technologies also helped Microsoft. According to With Paper, several millions have been invested in intranets, servers, functioning networks, etc. This made Microsoft the first company whose products were capable of running in huge networks. This in turn attracted large organizations and government institutions to Microsoft's product.