Lesson 10 High-Tech Battles The Browser Wars: o o o o o o

LESSON 10
HIGH-TECH BATTLES
The Browser Wars
The browser battles started with a strong showing from Netscape. From a startup in 1995, Netscape became a
billion-dollar company, the fastest-growing software company ever.
Four generations of browser technology took Microsoft… from sideline player to browser lead. The battles also
led to controversy, anti-Microsoft newspaper editorials, and governmental antitrust attention.

The Need for Speed
 Internet time refers to rapid change and evolution of
o Internet tools
o The marketplace
o Business practices
 An entire industry created in < 5 years
 Internet time also refers to acceleration of
o New product development
o Competitive activity
o Business tactics
 Using the Net’s communication & research capabilities to bring new products to market quickly is essential

Speed and Profits
 High profits from a successful early market entry can be plowed back into next generation products
 Slow entry and lost profits lead to erosion of a company’s fortunes

Speed and Innovativeness
 Slowness to market erodes consumers’ positive perceptions of a company
 Best-in-class companies use time pacing to govern new product activity
 Rapid product introduction is critical in high-tech markets
o Market leaders can count on high consumer interest, feedback and free advice
o Speed to market leads to learning
 Companies that use customer feedback have an important advantage over rivals

Speed and Alliances
 Early market entrants attract leading-edge partners
o Third-party suppliers approach market leaders with enhancements and improvements
o Allies fill in product and marketing gaps to provide a complete solution for customers
 For the market leader, money and talent are too scarce to “go it alone”
 Distribution partnerships are key to getting product to market

Speed and Standards
 Market leaders often play a key role in setting standards
 Companies that define standards can be in a strong strategic position for decades
 Rivalries between competing standards don’t usually last long
o Once a standard is established, the marketplace swings dramatically toward it
o The losing standard sinks quickly
o VHS vs. Beta Max
 When standards matter, success breeds success

Traditional New Product Development
 Too slow for Internet time
 Two main goals
o Uncover unmet customer needs
o Eliminate design mistakes before too many resources are committed
 Many new ideas enter the new product process
 Only a few new products emerge
 This process is expensive and time consuming
Rapid New Product Development

 Internet time forces firms to find new ways to identify user needs and rapidly launch new products
 The keys
o Maintain flexibility as long as possible
o Accelerate the process of market feedback
 These methods work especially well for online products
 But they are spreading to the rest of the economy

Modularity in Design
 Modular design breaks a new product into subsystems or modules
o Each module can be designed and tested separately
o Teams can work in parallel, rather than wait for a preceding group to finish its work
 Parallel efforts reduce dramatically the total time to launch new products
 Enables firms to handle speed and complexity in new product development
 Modularity requires two design features
o Visible design rules
o Hidden design parameters
 Visible design rules: define the ways that modules interact with each other and describe how they should fit
together
 Hidden design parameters: define how each module works internally
o Each team has full control over the hidden design parameters of its module
o Enables the team to delay final design choices as long as possible, to reflect marketplace
feedback and to accommodate changing technologies
Early Feedback
 Flexible new product development relies on the ability to get meaningful and rapid feedback from customers
o Identify new opportunities
o React to new designs
o Spot declining interest in existing products
 E-mail enables low-cost, rapid access to customers
o Can speed up feedback from lead users
o Faster and cheaper method of conducting surveys
 Using the Net to release early prototypes also permits valuable learning and testing

Rapid Prototyping and Testing
 Alpha release: limited release to trusted lead users and company employees
o May be asked to sign NDA
o The goal is to shape the product and understand how functional it is
o The competitive clock starts ticking with the alpha release
 Beta release: public release to widely test and to continue to refine the feature set
o Key goals are reliability, compatibility, and fixing user interface problems
o Beta-testing is a form of advertising and sampling
o A valuable substitute for extensive testing

Rapid Release
 Rapid product development sets the stage for profitability
 The ability to go to market quickly is a final key to success
 Time lost in the distribution cycle is even more damaging than time lost in development
 Once the product design is frozen and has been released to manufacturing, all time lost is pure cost

Standards Marketing
 Standards are a defining feature of high-tech markets
 Standards determine
o How hard drives, floppy disks, screens, keyboards, and memory communicate with each other
o How computers connect to the Internet
o How files and messages are turned into packets
o How packets reach their destination
 Conventions are also important
o General practices that designers expect
o Not formally set by a standards body

Two Types of Standards
 Open standard: based on an official process of debate, consensus, and voting by an official standards body
 De facto standard: established when a product or approach is so widely adopted that it becomes expected
 De facto standards are controlled by a single company – open standards are not
o Sun Microsystem’s has submitted Java to the ISO for acceptance as an open standard
o Microsoft’s Active X: a proprietary standard owned and controlled by Microsoft

Creation of an Open Internet Standard

Standards Strategy
 High-tech companies often have formal staff positions that set standards strategy
o Participate in the standards bodies
o Project which standards seem to be winning
 Managers need to decide which standards to deploy in their products
o Should base their products on open standards?
o Or should they try to win a battle in the marketplace with a proprietary standard?
 In high-tech markets, a single standard generally emerges and the winner takes all

Standards Competition Leading to Domination

Information Acceleration Systems
 Place consumers in a virtual buying environment
 IA systems simulate the information that’s available to consumers when they make a purchase decision
o Virtual showroom visits
o Advertising (TV, magazines, newspapers)
o Review articles and consumer-oriented reports
o Word of mouth
 Are these virtual environments realistic enough to accurately measure behavior?
o Early evidence is positive, but mixed

*** END of LESSON ***

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LESSON 10

Rapid New Product Development

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