From technology imitation to market dominance: the case of iPod

Purpose - This study aims to examine validity of the first mover advantage theory (FMA) in the context of digital audio player (DAP) market. It explores two research questions: do first-movers improve their resources and capabilities and thus establish industry leadership? Do firms' initial resources affect the timing of entry? Design/methodology/approach - To overcome the methodological problems of earlier research, the study employs historical analysis of archival sources, capturing the longitudinal nature of the market evolution and competitive dynamics within the industry. Findings - The results show that pioneering entry is significantly inferior to later entry strategy. While the pioneers failed, Apple Computer, a follower, gained dominance. Firm's resources influence timing of entry. The pioneers are small firms while large firms prefer to enter later. Research limitations/implications - This study analyzed the evolution of a single radical innovation from its inception through growth stage and results may not apply to continuous innovations. Practical implications - Managers should understand that it is not the first-in-market, but the firm that invests in developing its resources and capabilities in marketing, production and continual product improvement that ends up dominating the new market. Originality/value - The contribution is identified in three areas as the most important for future research of FMA: it considers advantages of both pioneers and followers in an integrative fashion, it looks into how firms' resources and environmental conditions affect performance, and it uses multiple measures of performance.