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First Mover (Dis)advantage!

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Do you remember wasting your childhood chasing Mario’s girlfriend on a TV videogame? Well good news for iPhone and iPad users is that the best selling video game “Mario” is now jumping to Apple’s platform post the failure of Nintendo’s 3DS console released in early 2011.

The games developer has resorted to such a move within six months of a product’s debut. In the last financial year, the company’s net profit fell 66% to $944 million compared to $2.78Bn last year.

The essence here is Nintendo which is the creator of the videogame concept is not able to sustain its first mover advantage created in early 1990s!

In economics theory and practice, it was widely believed that is, the first firm to market with a product will not only have the market to itself, but will be able to fend off all late-comers and dominate the market.

It was called "first-mover advantage."

Nice theory! But if you look around the world, especially the last 20 years, you will see: First movers are the one to bring new concept to market and are vulnerable to a unique challenge of educating its target market. They often make costly mistakes which will enable the late entrants to penetrate the same market with lowers costs

It’s not the first movers but the fast movers that take on the market. There are plenty of instances to prove this point:

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– Friendster was the inventor of social networking but today it is dominated by Facebook

– Apple Newton first entered the market with Business oriented palm tops devices was soon overtaken by Palm pilot and then by smart phones like BlackBerry which is currently challenged by iPhone

AltaVista gave the world its first search engine over internet and today it is dominated by Google. Anyone hardly remembers Altavista!

– Nintendo came up with first console based videogames which is now led by Microsoft’s Xbox and Sony’s Playstation today

– In India, Nokia which previously dominated the mobile handset market seems suddenly losing its position to new generation smart phones by Apple, Samsung and Blackberry

One very peculiar thing you will identify in most of the examples around us are from the technology space and the clear conclusion is the necessity of constant innovation.

Lessons to learn from the Fast Movers

  • Continuously innovate far beyond the original idea or feature set to maintain market leadership.(Google)
  • Build a team as mix of technical visionaries and business management leaders (Apple, Microsoft)
  • Concentrate on the customer pain points and eliminate that first before thinking of how to make more money (Facebook)
  • Reacting quickly to disruptive technologies or business models (Sony)
  • Never become complacent of the achievements because the next fast mover is ready to overtake you

I certainly do not discourage people coming up with new concepts. Venturing in a new space brings with it both great opportunity and great risk.

While a first mover can’t fully eliminate these challenges, being aware of them can help them improve its odds.

So what do you want to be First mover of Fast mover?

  1. Ankit Agarwal says

    Interesting article but you lost me at first mover disadvantage by mentioning Apple in there :-) iPod was the first mover in small-sized music devices and no one has managed to up them ever since. In many ways, iPhone reinvented smartphones and everyone else is just playing the catch-up game, similar story in the tablet space.

    But yes, being a first mover can be bad if the product lacks key features and company fails to innovate further giving the lead to a new player who makes merry. So, a first mover advantage is never to be discounted as long as they move fast as well or the product/service is delightful in the first go itself

    1. Rishabh says

      Apple has been an exceptional company and I completely agree to you that with iPod, it continued to have first mover advantage only because of its constant innovation. But you look at Apple newton messagepad, it was such huge revolution created and now it is no where. Generally with new product, huge costs are involved at the start which moderates with the learning curve.

  2. madhav says

    well said, we should encourage new technologies as well as new products. And also we cant even stick with only past things. From the small needle to a huge train we choose for new technology.

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