Fundamentals of Business

Netscape, while it was still a start-up

Netscape, while it was still a start-up with virtually no assets, gained an 84% market share in Internet Browsers by giving away its products. When it had the dominant position and tons of IPO money in its coffers, it charged for its browsers while it vigorously improved their performance. It doesn't surprise me that Microsoft initially missed the boat on this one. (1998 update: of course Microsoft is fighting back to unseat Netscape's dominance by using its operating system monopoly, some questionable practices, and a ton of money. In response, Netscape has returned to free browsers. This only demonstrates how strategically important control of a dominant standard is to both Microsoft and Netscape.)

Author's further contribution

Today Netscape Navigator is obsolete and Windows Internet Explorer browser is used by around 90% of because around 90% of world PCs operating Systems are Window based, Internet Explorer comes as a standard installed package, it is the case of, use it or leave it. Toshiba HD DVD is now obsolete, wow!

What you might do

Ask yourself: Is my industry in its product innovative phase or have market standards emerged? If there are no market standards, consider likely candidates and then work to establish them. This might require working with your competitors. You probably won't control market standards, but if you're worth your salt you'll get a jump on your competition and rapidly improve your products, manufacturing, and distribution to sustain your success in the marketplace.

If standards have already emerged in your markets, adopt them, don't waste time trying to replace them with your "technically superior" proprietary products. If you choose to attack a vibrant market standard with an alternative, you are doomed to failure, or condemned to a relatively trivial niche market. Your company will probably be among the walking dead.

Jim Utterback showed the futility of attacking an established standard. He gave historical examples of the persistent attacks by alternate solutions and successful responses by companies supporting the established standards. By the way, there is a way to replace an existing standard with a new one under certain conditions. However, it is not accomplished by directly attacking the existing standard.