Better to be a follower?

                Normally one might assume that being the first to enter a market you would have a great advantage because that meant that you were further along with the new technology and also that you could own the market because you had no competition.  But in reality sometimes companies that enter as a follower come out on top and the original product fades into the past.  Being the first to develop a product means that you must spend more money on exploratory costs to see if there is a need for a product, yet even then you can never be sure exactly how the public will react to it once it is released.  On the other hand, if you are the first mover to a market you can “shape customer preferences by establishing the precedent for product design” which hopefully means that you will ultimately come out on top.

            Visicalc was the first spreadsheet software and after it was introduced in 1979 it became an instant success.  It was an incentive for many business workers and corporations to purchase computers and the market for this program was quickly expanding.  This was followed by the release of the new IBM PC that used an Intel computer chip, but Visicalc was not able to keep up with this new technology.  As they rushed to sort out problems with their software, companies such as Microsoft had already surged into the market with Microsoft Excel, which was easier to use and quickly became the new standard.  In just a short time Visicalc had dropped out of the market entirely making a profit of around one million dollars.  Meanwhile, Microsoft Excel’s profits exceeded 156 million in just two years. 

            It is difficult to predict whether a company will be able to stay on top because they must be prepared to follow the market’s needs with whichever direction it takes.  Early entrants to a market set the precedence for a new product but they must be careful of other companies who are always trying to advance faster and take advantage of the new opportunity.  I think it is easy for newcomers to enter the market because they do not have to deal with exploratory research and they can focus more on the consumers needs and target their product development towards that.  This gives them a bigger benefit and they can quickly attract consumers who are ready to move forward with new technology. 

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