Why Do New Platform Technologies Fail ? The Paradox of Technological Superiority

Hakan Ozalp, Carmelo Cennamo

Research output: Contribution to ConferencePaperAcademic

Abstract

Technological superiority provides more functional value for users, and is a critical dimension that challengers can leverage to dethrone incumbent technological platforms. We argue that while technological superiority might help accelerating adoption on one side of the market by driving early user adoption, it also causes greater innovation challenges for complementors who face time compression diseconomies due to the learning of the new technological environment. This limits their contribution of complementary products, which creates unfavorable expectations and slows down platform adoption. Eventually, these platforms fail. We develop this logic conceptually through a qualitative analysis of the US video game console industry. A number of studies have documented a puzzling result that it is often the inferior technology to become the dominant standard. In the context of platform markets, our study highlights that what is perceived as 'superior' from a technological perspective is in fact 'inferior' from an ecosystem perspective that accounts also for complementors. 2 " We recognize that our technical architecture has initially made Sega Saturn more difficult to develop for than other next generation formats, including the Playstation. But that is also why we know that Sega Saturn is a superior gaming platform " .
Original languageEnglish
Number of pages10
Publication statusPublished - 2015
Externally publishedYes
EventAcademy of Management 2015 Annual Meeting - Vancouver, BC, Canada
Duration: 7 Aug 20157 Aug 2015

Lecture

LectureAcademy of Management 2015 Annual Meeting
Period7/08/157/08/15

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