1. Why did most of the early PDA companies fail, even if they had innovative and sophisticated product design? Early PDA companies were first movers.
First Movers have a major advantage of being “first to market” with new technology and can often gain a large advantage over competitors. In order to be a First-Mover, an organization must have a developed new technology with knowledge about the market, an established distribution system for the new technology, and an educated new customer who understands the benefits of the new technology (Schilling, 2008, pg. 88-90).
However, in the case of PDAs, being first did not allow the companies to gain an edge on the market. According to Schilling, increasing returns suggests that timing of entry can be very important.
First movers do not always have the advantage (Schilling, 2008).
In the early 90s, a number of companies began developing PDAs and analysts predicted millions would be sold. However, ‘market confusion’ and technology challenges slowed PDA adoption. Many PDA companies simply ran out of money by 1994. 2. Could early PDA companies have done anything differently to survive? Stretching their investments to allow the market to warm up to the new PDA concept and time to resolve technical challenges would have allowed more PDA companies to survive.
According to Schilling, the surviving companies included those that specialized in industrial devices. Palm Computing, entered the market late and produced a streamlined PDA that captured the attention of the market. This is something that other companies at the time were not able to accomplish. Schilling also discusses the following timing of entry opportunities for those who can innovate, respond to feedback from the customer and develop the product in quick cycle: Understand Customer Preferences
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To have more choices in its timing of entry, a firm needs to be able to develop the innovation early or quickly. A firm with fast-cycle development processes can be both an early entrant, and can quickly refine its innovation in response to customer feedback. In essence, a firm with very fast-cycle development processes can reap both first- and second-mover advantages Can the firm withstand early losses? The first mover bears the bulk of R&D expenses and may endure a significant period without revenues; the earlier a firm enters, the more capital resources it may need.
Does the firm have resources to accelerate market acceptance? Firms with significant capital resources can invest in aggressive marketing and supplier and distributor development, increasing the rate of early adoption. Is the firm’s reputation likely to reduce the uncertainty of customers, suppliers, and distributors? Innovations from well-respected firms may be adopted more rapidly, enabling earlier successful entry. (Schilling, 2008, Chp. 5) 3. Why was Palm successful where so many others had failed?
Palm entered the market late. Many secondary, or late movers, have been more successful than first movers. As a second or late mover, one can benefit from the ability to take advantage of various investments made by the first mover. Second movers also have the advantage of hindsight. That is, second movers can learn from the mistakes of first movers (business/ marketing as well as technical/ product improvements).
Failures or lessons learned are often the best teacher – allowing late movers to take advantage of technical enhancements or customer feedback that may not be available to first movers.
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It is evident that if a company understands the customer’s needs and delivers products or services that are of better quality or design than the first mover, the second or late mover company (in this case Palm Computing) will be more successful that the first mover in that market. Unfortunately, the introduction of smartphones in early 2000s, halted Palm’s sales of PDAs. Palm responded with the release of the Treo smartphone (Wikipedia, Palm PDA).
4. Was being late to the smart phone market a disadvantage for Apple? What factors enabled Apple to successfully enter when it did? In 2003, smartphones were introduced into the market by competitors such as Nokia, Ericsson, and Samsung.
Within just 3 years after its introduction, 13+ million smartphones had been sold by primarily these large companies. Being late to the smart phone market was clearly an advantage for Apple. It allowed Apple to perfect its product and develop a unique product with features and a design unlike any other smart phone device on the market. This strategic advantage has certainly enabled Apple to grow leaps and bounds above its competitors. 5. Are there increasing returns in the smart phone market?
Is it likely to eventually pick a single operating system as the dominant design? Sales will continue to grow in the smart phone market as phones continue to evolve to handle more and more features that not only provide calling services, but also computing and intranet services as well. Smart phones have become more of a standard for personal and professional use. Dominant Designs become the ‘de factor standard’ overtime and represents what the majority of the market engineers or designs to as being the standard (Schilling, 2008, pg. 65).
For PCs, Microsoft has been successful in creating the dominant design for operating systems – Windows.
For the smart phone market, although Android (the Windows of cell phones) represents an important component of the market design, Apple has a large share of the design as well with its iPhone and other compatible products that are increasingly popular. The Apple design is proprietary and thus it is difficult for others to leverage their design or tag along as Android users do without going through the Apple “AppStore”.
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Works Cited
Apple Inc.. (2013, May 31).
In Wikipedia, The Free Encyclopedia. Retrieved 02:17, June 1, 2013, from http://en.wikipedia.org/w/index.php?title=Apple_Inc.&oldid=557659338
Palm, Inc.. (2013, May 14).
In Wikipedia, The Free Encyclopedia. Retrieved 03:15, June 1, 2013, from http://en.wikipedia.org/w/index.php?title=Palm,_Inc.&oldid=554975188
Palm (PDA).
(2013, February 25).
In Wikipedia, The Free Encyclopedia. Retrieved 03:11, June 1, 2013, from http://en.wikipedia.org/w/index.php?title=Palm_(PDA)&oldid=540297397
Schilling, Melissa A. Strategic Management of Technological Innovation. McGraw-Hill Irwin: New York 2nd Edition.
