1. Why did most of the early PDA companies fail, even if they had innovative and sophisticated product design? Early PDA companies were first movers. First Movers have a major advantage of being “first to market” with new technology and can often gain a large advantage over competitors. In order to be a First-Mover, an organization must have a developed new technology with knowledge about the market, an established distribution system for the new technology, and an educated new customer who understands the benefits of the new technology (Schilling, 2008, pg. 88-90). However, in the case of PDAs, being first did not allow the companies to gain an edge on the market. According to Schilling, increasing returns suggests that timing of entry can be very important. First movers do not always have the advantage (Schilling, 2008). In the early 90s, a number of companies began developing PDAs and analysts predicted millions would be sold. However, ‘market confusion’ and technology challenges slowed PDA adoption. Many PDA companies simply ran out of money by 1994. 2. Could early PDA companies have done anything differently to survive? Stretching their investments to allow the market to warm up to the new PDA concept and time to resolve technical challenges would have allowed more PDA companies to survive. According to Schilling, the surviving companies included those that specialized in industrial devices. Palm Computing, entered the market late and produced a streamlined PDA that captured the attention of the market. This is something that other companies at the time were not able to accomplish. Schilling also discusses the following timing of entry opportunities for those who can innovate, respond to feedback from the customer and develop the product in quick cycle: Understand Customer Preferences
To have more choices in its timing of entry, a firm needs to be able to develop the innovation early or quickly. A firm with fast-cycle development processes...
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Schilling, Melissa A. Strategic Management of Technological Innovation. McGraw-Hill Irwin: New York 2nd Edition.
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