The strategy of repeated 'open' and 'narrow' approaches for standardised media

Abstract

International standardisation contributes to market expansion. The standardisation also leads to the rapid spread of the technology and allows easy entry for many competitors into the market. This often leads to severe price erosion, with the result that a company which develops business opportunities from innovation fails to profit therefrom. This paper examines the way in which Sony could succeed in profiting from the business of 130 mm MO media in spite of the fact that the media was standardised. A key factor for the success is a strategy of repeated 'open' and 'narrow' approaches. One approach is to build an entry barrier by creating a market in demand for highly reliable media. The other approach is periodic introduction of a new generation of the media with double capacity and its periodic standardisation. The market, which is once open to competitors through standardisation, is narrowed again by the aforementioned strategy.