Why Dominant Companies Are Vulnerable
Journal
Sloan Management Review
ISSN
1532-9194
ISSN-Digital
1532-8937
Type
journal article
Date Issued
2012-02-20
Author(s)
Abstract
Recent research suggests that, as consumers feel that their choices are restricted, many respond by turning away from the market leader.
It is widely assumed that in many technology markets, dominant players have a powerful advantage and often are able to leverage that edge over time. But this is not necessarily true. Over the past decade, popular social networking sites including Friendster, MySpace and Bebo initially picked up a large number of users only to lose ground to new competitors and fade into the background.
Facebook, by contrast, has succeeded at dramatically expanding its position in the global market, even as it has worked to manage an increasing number of dissatisfied users. Similar patterns of emergence, growth and dominance, followed by consumer disenchantment or ambivalence and a loss of brand equity have affected well-known technology companies such as Microsoft and AOL. Why do companies move from market strength to vulnerability?
It is widely assumed that in many technology markets, dominant players have a powerful advantage and often are able to leverage that edge over time. But this is not necessarily true. Over the past decade, popular social networking sites including Friendster, MySpace and Bebo initially picked up a large number of users only to lose ground to new competitors and fade into the background.
Facebook, by contrast, has succeeded at dramatically expanding its position in the global market, even as it has worked to manage an increasing number of dissatisfied users. Similar patterns of emergence, growth and dominance, followed by consumer disenchantment or ambivalence and a loss of brand equity have affected well-known technology companies such as Microsoft and AOL. Why do companies move from market strength to vulnerability?
Language
English
HSG Classification
contribution to scientific community
Refereed
Yes
Publisher
Massachusetts Institute of Technology
Publisher place
Cambridge, Mass.
Volume
53
Number
2
Start page
12
End page
14
Pages
3
Subject(s)
Division(s)
Eprints ID
220723