Yet Netscape today survives only as a small unit of Time Warner. Our research suggests that a good part of the reason was the type of waters both had stepped into. Cellular telephones and Internet browsers would fall in the lower right cell of the matrix, with both the technology and the market evolving rapidly irregularly for cell phones, smoothly for browsers.
In such conditions, it is very difficult for companies to gain durable first-mover advantages. One can observe vintage effects in many product categories. In the gaming console market, which Magnavox Odyssey entered in , at least six generations of technology emerged in rapid succession, each pushing forward a new winner. The same thing happened in hard drives and laptop computers. The Osborne 1, generally considered to be the first commercially available, truly portable computer, weighed 24 pounds and was soon superseded by lighter models.
But laptop technology evolved so quickly that each successor, after briefly achieving dominance, was soon supplanted itself. The incumbent tends to be at a disadvantage, since it often lacks the production capacity or marketing reach to serve a rapidly expanding customer base.
A rapid pace of market evolution makes long-term dominance unlikely, but it does not necessarily bar a first mover from achieving worthwhile short-term gains—provided it has an acute sense of when to exit.
Consider once more the Internet browser market. In , the Internet started growing extremely quickly. Within two years, the number of Web sites had increased fold. This frantic pace enabled later entrants, chief among them Microsoft, with its enormous resources, to find plenty of space in which to grow.
A rapid pace of market evolution does not necessarily bar an incumbent first mover from achieving worthwhile short-term gains—provided it has an acute sense of when to exit. Achieving a durable advantage under such conditions is not, however, impossible. Only a first mover with mighty resources, far superior to those of competitors, has any chance of achieving longer-term first-mover advantages when both technology and markets are moving rapidly.
For instance, all else being equal, a first entrant with a very strong brand name will tend to be more successful in locking in customers than one without a recognized brand name. A good example of a firm today that makes the best of its endowments in the most difficult of circumstances is Intel. But do not take the possession of substantial resources as a guarantee of winning.
When IBM, for example, introduced the hard drive in the late s, it was the largest computer maker in the world. Since then, a sequence of fast-growing markets for minicomputers, personal computers, and laptops has generated relentless demand for new versions of the device.
Despite a superb brand name and plenty of resources, IBM could not stay atop the hard-drive industry for long. Neither could opportunistic later entrants. However, the iPod mini has already improved upon its predecessor, and Dell is offering price cuts and a hour battery for its gigabyte player. The four scenarios in the matrix place premiums on very different sets of assets and capabilities.
Indeed, its leading product back then, the instant camera, embodied a year-old design. After almost two decades of fruitless diversification, the company had to file for bankruptcy protection. Even if Polaroid had been the first mover into digital cameras, a category it wanted to dominate, our analysis suggests its fate would have been the same. New product categories are constantly emerging around us.
In most instances, companies struggle not with whether to enter a new product category altogether but with whether to enter early or later. Sometimes executives wonder if it would be wise, for example, to wait until the companies in the first wave have been weakened by competition and seen their technological edge dulled. But by that point, there might not be enough time left to master the technology in question.
Still, in some situations, it may not make a lot of sense to try to be the first mover. After all, first-mover advantage occurs not when you enter a market, but when you start making real money in it. To make real money in an evolving market, you need to analyze the kind of environment that surrounds the new category; to assess the character and depth of your resources, comparatively speaking; and then to decide on the type of first-mover advantage—short-term or durable, immediate or delayed—that is most achievable, if indeed any is.
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Suarez and Gianvito Lanzolla. The Pace of Change. This article uses the experience of foreign investors in China to shed light on the question of whether an early mover or a late mover strategy will result in better performance in the Chinese, Eastern Europe, and post-Soviet market-based system characterized by both potential opportunities and tremendous uncertainties and difficulties. Academy of Management Review , 23 1 , This paper explores the complaints by companies in different countries on the unfairness of having to compete against foreign rivals facing more lenient environmental regulations.
In this article, the author examines the competitive conditions for firms in such a position. Development of a new pollution-reduction paradigm centered on lowering costs by reducing pollution is outlined.
First mover advantage through franchising , Michael, S. Journal of business venturing , 18 1 , This paper analyses the concept of first mover advantages through franchising.
This paper focuses on whether and how first mover advantage is created through this technique. This is achieved using formulated structural equations models and empirical results from the restaurant industry.
Implications for research and practice are discussed. First - mover advantages from pioneering new markets: A survey of empirical evidence , Robinson, W. Review of Industrial Organization , 9 1 , This study finds that market pioneers follow innovative strategies that have high initial costs and risks, but yield high potential returns.
First - mover advantages and path dependence , Mueller, D. International Journal of Industrial Organization , 15 6 , This paper advances the belief that the onne or two firms who emerge as industry leaders are usually the first to enter into the industry.
This paper further identifies four categories of first mover advantage related to demand and supply factors, and link these concepts to that of path dependence. Does it pay to be a first mover in e. The case of Amazon. Management Decision , 38 7 , Using Amazon. Consider these general examples of successful first movers:. The technology space is full of first movers. This field is constantly innovating and finding not only new methods for achieving goals but also entirely new products for consumers to use.
Consider technological innovations like smartphones, tablets and smart speakers, all of which had an initial first mover that dominated the marketplace before competitors arrived. The automotive field is another that's benefited from first movers over the years.
There was, of course, the introduction of the very first car. Since then, various car makers have designed new types of vehicles and engines that entirely changed the automotive space and customer desires.
Consider, for example, the introduction of the minivan or the fully electric vehicle. A single manufacturer initially created these products before competitors joined the market. Convenience products are a broader category that also tends to make an impact in the first mover space. For example, consider luggage optimized for airplanes. Before air travel was ubiquitous, most travelers used large suitcases or chests to transport their personal effects from one place to another.
As commercial plane travel increased, a luggage manufacturer added wheels to their suitcase to make it easier to pull through the concourse. Eventually, competitors followed suit, changing the luggage landscape.
A late mover is a company that enters the marketplace with a new product substantially after their competitors have debuted new products. Late movers often choose their timing purposefully to ensure their product is optimized to meet customer needs and can be produced as cheaply as possible to save the company money. A fast follower is a company that quickly imitates a first mover and enters the marketplace with a competing product as fast as possible. Fast followers hope to capitalize on the initial consumer interest in the new product and earn some of the first mover's market share without investing substantial time or money in marketing or customer education.
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