Design Dominance in IT Industry

Innovation in many product designs results in the rise of a ‘Dominance Design’ which dominates the market and establishes itselves as a standard or leads to standardization. This paper provides a overview of Design Dominance discussing each phase of design dominance, factors leading to and affecting design dominance. Then the paper discusses the factors that lead to successful rise of multiple product designs without the emergence of a dominant design and the conclusion.

Introduction

A radical innovation or technological discontinuity leads to emergence of a new technology (Koski & Kretschmer, 2007). Firms will introduce alternative designs until some design combination becomes preferred by end-users, accepted by the market and as the industry standard becoming a ‘dominant design’ (Koski & Kretschmer, 2007) until which a lot of uncertainty exists in the industry. The term dominant design” is first coined by Utterback and Abernathy (1975). According to Utterback and Abernathy (1975) it is defined as a specific path, along an industry’s design hierarchy, which establishes dominance among competing design paths. It embodies the requirements of many classes of users of a particular product but many not necessarily the one which embodies the most extreme technical performance. It is a single architecture that establishes dominance in a product class (Anderson & Tushman,1990) .It represents a milestone or transition point in the life of an industry e.g. Intel chipsets began to dominate the interior of the pc’s since IBM chose Intel 8088 CPU in 1981 (PC Components, Features, and System Design, informit.com) and have a strong and significant effect on the firm’s survival (Suarez & Utterback, 2010) as the establishment of the Intel chipset as a dominant design lead to rapid growth of Intel.

Dominant designs emerge across diverse product classes such as mobile communications, computers, printers or even in software paradigm like search engines etc and remain dominant until the next technological discontinuity (Anderson &Tushman,1990). A dominant design is more likely to emerge with products with weak appropriability, weak network effects, low product radicalness, and high R&D intensity (Srinivasan, Lilien & Rangaswamy ,2005) but there could be multiple product designs with no emergent dominant design in certain product categories e.g. flash memory cards (Vries, Ruijter & Argam, 2009).

Phases of Design Dominance

Emerging technologies pass through several stages before they mature. As per Abernathy – Utterback Model (1975) the development of a Dominant design passes through 3 phases, Fluid Phase, Transitional Phase, Specific Phase marking key milestones (Saurez, et al., 2003) during each phase.

Fluid Phase refers to the period starting from the inception where research groups aiming to create new technology or replace a existing technology to appearance of the first working prototype and launching the first commercial prototype (Saurez, et al., 2003) occurs during the. A lot of technological and market uncertainties and experimentation with the product in the market occur. Firms continue to emphasize on product innovation and many small firms compete on differentiated product features and try to establish their product as the ‘dominant design’ or try taking control of the complementary assets (The Abernathy – Utterback Model, innovationzen.com). In the case of video controller chip industry this phase lasted from 1991 to 1998 when about 19 firms tried to dominate each other (Ong, et al., 1997). In the case of Ink-Jet printers the invention of thermal ink-jet printing technology disrupted the dominant dot-matrix printing technology in 1979 to the late 1990’s is referred to as fluid phase. Various firms like Canon, HP, Brother, Epson, and Xerox tried to establish market dominance (Clymer & Asaba,2008) in Ink-jet technology.

Transitional Phase is referred to the period where the market and the industry start standardizing and the ‘Dominant Design’ appears. Firms start architectural innovation and the competitors competing in other product designs starts to decline. It is in this phase firms begin process innovation and mass production of the product with less differentiation (The Abernathy – Utterback Model, innovationzen.com). In the case of Video controllers 1998 – 1999 is marked as transitional phase where there are no new entrants but numerous existing entrants exited from the market (Ong, et al., 1997). In the case of Ink-Jet printers the period from 1990 to 1995 has seen the Ink-jet technology growing rapidly with HP, Epson and Canon remaining as dominant players covering every niche of the market introducing various models (Clymer & Asaba, 2008).

Specific Phase, the last phase is referred to the period of establishment of the ‘Dominant design’ and the post dominance era till the next technological discontinuity occurs. The firm shifts focus from product differentiation to product performance and costs. Firms secure their positions through firm-level complementary assets such as supplier relations, distribution channels (The Abernathy – Utterback Model, innovationzen.com). The competition in this phase occurs within the established standard based on production capabilities and process innovation (Saurez, et al., 2003) as opposed to competition between alternate product designs. In the year of 2002, the remaining big companies focused on

increasing the performance of the video controllers for market dominance with Intel clearly winning the battle with 67% market share (Ong, et al., 1997). The period from late 1995 to 2003 marks the specific phase in the emergence of Inkjet printers with HP, Kodak and Epson remaining as the dominant players focusing on component based innovation technology such as toners and cartridges within the Ink-jet technology (Clymer & Asaba, 2008).

Factors Influencing Design Dominance

The firm-level and environmental factors strongly influence the emergence of a dominant design irrespective of the associated technology, but no single factor is strong enough to favor one design over the other. The outcome is the result of interplay between firm level factors and environmental factors leading to a technological dominance.

Firm level factor’s include but not limited to firm’s technological superiority, complementary assets and credibility, installed base as in the case of Video controllers Intel became the dominant player due to its technical dominance of the integrated video controllers or integrated graphics chipset (Ong, et al., 1997) and RISC became dominant in the computer workstation industry because of its architectural advantages over CISC (Khazam & Mowery,1992), strategic maneuvering like market entry timing, marketing price (Saurez, et al., 2003) which positioned Sony playstation as a dominant design over Xbox in the gaming domain by successfully establishing itself as a strong brand and through its aggressive pricing (Digital Electronic Products, articlesphere.com), internal R & D (Srinivasan, Lilien & Rangaswamy,2005), value nets which is the key to the success of windows, Microsoft assembled a series of integrated software platforms that created networks of added value for users (Why the World Went Windows, roughlydrafted.com). Patenting also strongly affects the firm’s ability to establish their design as the dominant design as patenting gives the firms temporary monopoly on the technology. The inkjet technology is one of the highly patented technologies as thousands of Inkjet technology patents are issued by U.S. Patent and Trademark Office (USPTO) during each year of 1990’s (Clymer & Asaba, 2008). This strategy of the firm also influenced the Inkjet technology to be a dominant design.

Environmental factors include regulation ,switching costs, regime of appropriability and characteristics of the technological field (Saurez, et al., 2003), network effects such as supporting products, users etc which helped GSM to dominate the world’s wireless market as the number of users and the handsets supporting increased rapidly (Koski & Kretschmer, 2007) , standard setting as in the case of TCP/IP which became the dominant network communication standard by successfully meeting the OSI reference model set by ISO (History of the OSI Reference Model, tcpipguide.com) ,appropriability which governs a firm’s ability to capture rents associated with innovation as in the case of the Ink-jet printers where canon licensed its technology to HP leading to dominant emergence of Ink-jet printers (Srinivasan, Lilien & Rangaswamy, 2005).

Is there always a dominant design?

A technological discontinuity does not always lead to a dominant design. It is also possible for products with multiple product designs to be simultaneously successful. If the time is short to the 2nd technological discontinuity no dominant design emerges (Anderson & Tushman, 1990). The co-existence and co-relation between multiple designs depends on the factors such as distinct product features, gateway technologies to enable communication between the products, multi-channel end systems for ease of consumer interoperability, appropriability and persistency of the firms. As in the case of flash memory cards the distinct function of each design targeting different segments of market and consumer usability along with the availability of standard cables and cheap multi card readers which are royalty fees enabled multiple designs to coexist without any dominant design for the product (Vries, Ruijter & Argam, 2009). Also, the emergence of a dominant design can fail as in the case of mobile payment service in Finland without the support of key multilevel organizations and institutions in the market (Dahlberg, Huurros & Ainamo, 2008).

Conclusion

Dominant designs are critical junctures in the evolution of technology (Anderson & Tushman, 1990). The economies of scale can come into effect leading to the rapid growth of the firms pioneered the dominant technology. It also helps build larger install base, strong reputation, more time for experimentation and also profit from the appropriabilities. Though there are examples with multiple product designs, emergence of a dominant design helps firms in reducing costs by process innovation and mass production. Also the consumers can easily choose the technology which is dominant avoiding switching costs to a dominant design later. Emergence of dominant design depends on various firm level and environmental factors but it’s not necessary for a dominant design to emerge in a product design. If a dominant design emerges it is vital for the firms to quickly adapt to the new dominant technology for market dominance and technology leadership in the rapidly changing and highly competitive market.