THE FIRST MOVER ADVANTAGE IS

MYTH

Presented
By
P.Sudhakara Reddy

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 Some Research Facts
• The failure rates of pioneers as of 2000 is quite
high - 64% for all industries studied.
• For the 42 traditional industries studied, the failure
rate was 71%; for high-tech industries, 50%.
• In 2000, the first movers in the 66 industries had
an average market share of only 6%.
• Early followers averaged almost 3x the market
share of the pioneers.
Source:Will and Vision by GeraldTellis (University of Southern California)
and Peter Golder (New York University)

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Why People Believe that first movers
have advantage??

The market often perceives first movers as having

advantages because it has misperceived who was
first.
--The first mover in the disposable diaper
market was Chux. P&G didn't come on the scene
until 30 years later but because Chux disappeared
history was reinterpreted and P&G were thought
of as the first mover.

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Success of leaders and followers
PRODUCT INNOVATOR FOLLOWER WINNER
Airliners De Havilland (Comet) Boeing (707) Follower
Float glass Pilkington Corning Leader
X-Ray Scanner EMI General Electric Follower
Office P.C. Xerox IBM Follower
Cricket League ICL IPL Follower
Diet Cola R.C. Cola Coca Cola Follower
Instant Cameras Polaroid Kodak Leader
Pocket Calculator Bowmar Texas Instruments Follower
Microwave Oven Raytheon Samsung Follower
Plain Paper Copiers Xerox Canon Not clear
Fiber Optic Cable Corning many companies Leader
Video Games Players Atari Nintendo/Sega/Sony Follower
Disposable Diapers Chux Proctor & Gamble Follower
Web browser Netscape Microsoft Follower
PDA Psion, Apple Palm Follower
MP3 music players Diamond Multimedia Sony (&others) Follower

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 First Mover vs. Late Movers

Hill, C, & Jones, G. Strategic Management “An Integrated Approach”

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 First-Mover Disadvantages

– High research and development expenses

• First mover spends money on exploratory research
that results in failure before achieving success as well
as developing complementary goods and a market
– Undeveloped supply and distribution channels
• A new-to-the-world technology often has no
appropriate suppliers or distributors. The first mover
has to develop and produce on their own or assist
others in the development and production of the
needed supplies
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 First-Mover Disadvantages
-Immatureenabling technologies and
complements
PDA developers had created useful palm-
size devices but the battery and modem
technologies needed to support the PDAs
was not developed enough
-Uncertainty of customer requirements
-Kodak introduced the 8mm video
camera expecting a large number of
customers due to its design and quality.

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 Dilemmas of First Movers

1. How much improvement does the innovation

provide over previous solutions?
2. Does the innovation require enabling technologies,
and are these technologies sufficiently mature?
3. Do complementary goods influence the value of the
innovation, and are they sufficiently available?
4. How high is the threat of competitive entry?

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 Dilemmas of First Movers

5. Can the firm withstand early losses?

6. Does the firm have resources to accelerate

market acceptance?

7. Is the firm’s reputation likely to reduce the

uncertainty of customers, suppliers, and
distributors?

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 Just Look At Successful Companies

 The real causes of enduring market leadership are

vision and will.
 Enduring market leaders have a revolutionary and
inspiring vision of the mass market, and they
exhibit an indomitable will to realize that vision.
 They persist under adversity, innovate relentlessly,
commit financial resources and leverage assets to
realize their vision.

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 QUERIES?

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