Abstract: The paper analyzes an extended Hotelling model with network externalities,and carries out the research on the impacts that network externalities put on competition tactics of companies.The paper puts forward and demonstrates undermentioned theoretic propositions:market share(not quality) is not only the focus of competition,but also the key of market success.Finally,the paper gives the details about dominant tactics.

Key words: network externalities, Hotelling model, differentiation competition, dominant tactics