Microsoft PowerPoint - EURAS 2009 Backwards compatibility 2009-06-20 by gabyion

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									               EURAS Workshop Paris, 2009-06-22



Impact of Backwards Compatibility on
        Standard Dominance

      The Case of Game Consoles

          Johannes Kramer & Henk J. de Vries
         Rotterdam School of Management, Erasmus University
       (010) 408 20 02, hvries@rsm.nl, http://www.rsm.nl/hdevries
Rotterdam School of Management, Erasmus University
Chair on Standardization
Research on Standards Battles

  Geerten van de Kaa:
  Factors for standards dominance
Rotterdam School of Management, Erasmus University
Chair on Standardization
Research on Standards Battles (2)

  Simon den Uijl:
  Relating factors for standards dominance to
  phases in technology development;
  Interrelations between factors
     Rotterdam School of Management, Erasmus University
     Chair on Standardization
     Research on Standards Battles (3)

          Henk de Vries, Joost de Ruijter & Najim Argam:
          Factors for multiple designs




De Vries, Henk J., Joost de Ruijter & Najim Argam (2009) Dominant design or multiple designs:
The flash memory card case. Technology Analysis & Strategic Management (forthcoming)
Rotterdam School of Management, Erasmus University
Chair on Standardization
Research on Standards Battles (4)

  Huibert de Vries et al. Case studies
Rotterdam School of Management, Erasmus University
Chair on Standardization
Research on Standards Battles (5)

  Robbert Flipsen: 46 historical cases
Backwards Compatibility


  A successor standard is compatible
  if compliant technologies are able to work together
  with products that were able to interoperate
  with its predecessors
  (Egyedi & Loeffen, 2008)
Dominant standard


  A standard that has achieved a clear market share
  advantage over alternative designs
  (Anderson & Tushman, 1990)
Conceptual Model




  Backwards        +   Standard
  Compatibility        Dominance
    Research approach
•    Desk research data:
      – Websites of retailers
      – Forums on the internet
      – Annual reports of manufacturers
      – Articles/papers


•    Qualitative research data:
      – 12 managers of Game console stores
           • 8 interviews within retail stores of E-Plaza chain
           • 4 interviews within regular game console stores
      – Interview Field experts:
           • Former executive of Sony
           • Melissa Schilling, Associate Professor of Management at Stern
               School of Business, New York University who investigated this
               case and published about dominance battles within the game
               console industry

NB: None of the manufacturers (Microsoft, Sony and Nintendo) was willing to
   cooperate in this research
                             Games
Controllers




              Memory cards
                                                           3rd Generation
                      Introduction price ($)
                                                                                       Introduction price ($)


                                                            Introduction price ($)
       200
       180
       160
       140
       120
Amount 100
                                                                                                        B        Units sold(mln)


                                                                                                                B Backwards
        80                                                                                                        compatible
             Units sold(mln)
        60
        40                                                                                                       Introduction price ($)
                                               Units sold(mln)
        20                                                                      Units sold(mln)
         0
                  NES (Nintendo)                      Atari 7800                     Sega Master System
                                                    Console Type
                                       4th Generation
                                                                             Introduction price ($)

       700
       600
                                       Introduction price ($)
       500                                                                                             Units sold(mln)
       400        Introduction price ($)                  Introduction price ($)
Amount                                                                                                B Backwards
       300
       200   Units sold(mln)
                                                 B                                                       compatible

       100                     Units sold(mln)      Units sold(mln)
         0                                                                                             Introduction price ($)
                 SNES Sega Mega     NEC SNK Neo Geo
               (Nintendo) Drive TurboGrafx-16
                                            Console type
                                         5th Generation                                  Introduction price ($)


                                                                Introduction price ($)
      1000
       900
       800
       700
       600                                             Introduction price ($)
                      Introduction price ($)                                                                      Units
Amount 500                                                                                                        sold(mln)
       400
       300
       200
       100
                                                                                                                  Introduction
         0
                                                                                                                  price ($)
                Sony     Nintendo        Sega          Atari          3DO Philips CD-I
             Playstation    64           Saturn       Jaguar       Interactive
                                                                   Multiplayer
                                               Console type
                                                   6th Generation
                   Introduction price ($)       Introduction price ($)



                                                                         Introduction price ($)           Introduction price ($)
       300

       250

       200
                           B
                                                                                                                                   Units
                 Units sold(mln)                                                                                                   sold(mln)
Amount 150
                                                                                                                              B Backwards
       100                                                                                                                     compatible
                                     Units sold(mln)
        50                                                     Units sold(mln)          Units sold(mln)
                                                                                                                                   Introduction
         0                                                                                                                         price ($)
             Sony Playstation 2 Microsoft Xbox                  Nintendo             Sega Dreamcast
                                                               Gamecube
                                                 Console type
                                                   7th Generation
                                                                                   Introduction price ($)



         500
                                                      Introduction price ($)
         400              Introduction price ($)                                                              Units

         300
                                                                                            B                 sold(mln)

Amount                                                                                                      B Backwards
         200
               Units sold(mln)
                                 B                              B              Units sold(mln)               compatible

         100                                  Units sold(mln)
                                                                                                              Introduction
          0                                                                                                   price ($)
                  Nintendo Wii            Microsoft Xbox 360          Sony Playstation 3
                                             Console Type
Conclusion


  Positive but not decisive impact of backwards
  compatibility on standards dominance

  Degrees of backwards compatibility

								
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