Apple Case Study

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From technology imitation to market dominance: the case of iPod

Ivan Abel

Department of Marketing, The Peter J. Tobin College of Business, St John’s University, Queens, New York, USA

Abstract

Purpose – This study aims to examine validity of the first mover advantage theory (FMA) in the context of digital audio player (DAP) market. It explores two research questions: do first-movers improve their resources and capabilities and thus establish industry leadership? Do firms’ initial resources affect the timing of entry? Design/methodology/approach – To overcome the methodological problems of earlier research, the study employs historical analysis of archival sources, capturing the longitudinal nature of the market evolution and competitive dynamics within the industry. Findings – The results show that pioneering entry is significantly inferior to later entry strategy. While the pioneers failed, Apple Computer, a follower, gained dominance. Firm’s resources influence timing of entry. The pioneers are small firms while large firms prefer to enter later. Research limitations/implications – This study analyzed the evolution of a single radical innovation from its inception through growth stage and results may not apply to continuous innovations. Practical implications – Managers should understand that it is not the first-in-market, but the firm that invests in developing its resources and capabilities in marketing, production and continual product improvement that ends up dominating the new market. Originality/value – The contribution is identified in three areas as the most important for future research of FMA: it considers advantages of both pioneers and followers in an integrative fashion, it looks into how firms’ resources and environmental conditions affect performance, and it uses multiple measures of performance. Keywords Competitive strategy, Marketing strategy,...