Wharton Chapter 8

The chapter begins with a question about how can a company like Mergenthaler last over 100 years, going through wave after wave of technilogical change and goes on to mention that "incumbent firms often have advantages that allow them to persist and lead through periods of technological change. Because of these advantages, even when they do not win the battle to create the first and best technology, they can still go on to win the competitive war..." (Tripsas, 173). These advantages are even more pronounced in the Information Technology industry because once standards are accepted, it is very difficult for a company to come into the market and displace a widely accepted standard even with a better product. Iomega Zip Drive is an example of this. Introduced in 1995 with the purpose of replacing the aging 1.44mb floppy drive with 66x more storage room and faster read/write speeds. On paper, an obvious replacement but just never caught on partially because of existing floppy standards as well as bad timing. Every computer at the time had a specific port on the motherboard for a floppy drive and it was as standard in every PC as a car horn was in an automobile. Anywhere you went with a floppy you could find a computer to read your media. ZIP drives were not all that common, so you had to bring your zip drive, power supply, and disks with you to be sure you could hook them up. Not to mention the CD required to install drivers to use the device. Floppies were so entrenched in the mindset of computer users that the ZIP drives never took off. ZIP drives may have eventually have taken a foothold in the OEM business, except a few years later CD-R technology became the next portable computing storage standard followed by USB flash drives.

*disclaimer* PC World and several other publications now list ZIP drives as one of the top 15 or 20 worst computing products of all time, but at the time of release many thought they would be the next standard and utilized in markets other than computing. A Nov, 1998 article from the Edge: Work-Group computing report says this: "Additional markets that can take significant advantage of a Zip drive are game systems, digital photography, navigation systems -- basically any product that needs high-capacity, high performance, affordable, removable storage," said Mike Lynch, director of beyond-PC applications at Iomega. "The sole focus of the beyond-PC applications group is to move the Zip drive beyond the PC, providing not only new revenue opportunities for Iomega, but significant new brand awareness for Zip drives and disks beyond the customary PC market."

Sony MiniDisc is another example of solid technology that couldn't overcome the de-facto standard of its time, competing with CDs for portable listening devices. It didn't help that Sony refused to license the technology and had trouble getting music studios to sign up, but a major barrier was an already accepted standard that it simply couldn't compete with.

Complementary assets, such as distribution, existing customer and supplier relationships, and service capability are advantages that incumbent firms have over new entrants and can be a barrier to success for companies who may posess better technology or products.

Commercializing emerging technologies is much more than engineering, developing, and producing products and hoping there is a customer base willing to make the purchase. Creating new customer segments is just as important as commercializing the product, if not more important. Many firms hold back from investing in newer technologies because they don't believe that it fits their current market segment. Why are they afraid to create a new market segment? Competitors change also. Many firms are likely to study their current rival companies when it comes to introduction of new products and the market. However, often times the biggest competitor is one they never thought of, and are less prepared to compete because their sights were on the wrong target.

As brought up very briefly in the book, social networks may play a role in all this. In Second Life, an HP executive can sign on and give himself a tour of the Dell island and all it has to offer, including seminars, sales and product information, e-commerce methods, and much more. During business hours, he could even walk up and talk with a Dell customer representative who would have no idea this person was with HP gathering competitor information. Dell is displaying plenty of useful competitive information, as are many other companies. This is just one additional resource that competitors can use to improve their competitive advantage.

Commericializing emerging technologies is the 3rd hurdle in the race of developing emerging technologies. The others are decision to invest in developing emerging technologies and then the challenge of internal organization effectively acquire the capabilities.