First to market, first to fail?
The First-Mover-Advantage is established marketing rhetoric that reminds us that the dream is enough to sustain you. But isn’t it just a sugar-coated myth? Several case studies suggest that early entrants with the most innovative product offering have not stood the test of time.
This is majorly a result of factors beyond the control of the company – a) the pace of technological advancements in the sector, b) the pace of market expansion for the product. Do not accept it as the howl of the Wolf on Wall Street because the following instances clearly debunk the First-Mover-Advantage.
Friendster vs. Facebook
Friendster was one of the pioneers in social networking sites. It was launched in 2002 and reached 3 million users in a few months. But with its raging popularity, Friendster could not cope with the sudden onslaught of users. The servers slowed down. The website crashed during peak engagement times. The demand was exceeding the supply.
Unfortunately, this was just the first wave that hit them. It was eventually capsized by the launch of Facebook in 2004. Friendster had already introduced the audience to the benefits of a social network. With a sleek user interface, mastery in Public Relations, and a controlled expansion model from a Harvard unit to a diverse audience, Facebook was a better product and people had all the reasons to switch. Friendster tested the rough waters and Facebook reaped its benefits and has now achieved monopoly as a social-networking platform. The first-mover-advantage did not ascertain Friendster’s success and it had to be shut down in 2015.
Yahoo vs. Google
Yahoo was founded by two students of Stanford University – Jerry Yang and David Filo – in January 1994; while Google started when Sergey Brin and Larry Page, also Stanford alumni, created BackRub in early 1996, which later transformed into Google Inc. in 1998 at a friend’s garage in Menlo Park, California.
From its inception, Yahoo was well ahead of the pack. It had ushered in cloud storage with Yahoo Briefcase, way before Google Drive or Dropbox. Its features included Flickr before Instagram, Yahoo TV before YouTube, Yahoo Music before Spotify, Yahoo Notebook before Evernote, and so on. Now, it is no longer an independent company with its core operating business sold to Verizon in 2017. Despite Yahoo’s early foundations as a reputed search engine, it failed to capitalise on its first-mover-advantage.
Every 90’s kid still associates the yodel with Yahoo. The brand had the youth connect and panache in spades. What it lacked was a clear, reliable brand vision. Along the way, Yahoo seemed to have lost focus in its identity between a search portal, technological company, advertising platform, and even a social network. It was kept on its toes by Google in a bid to claim a larger share of the market. Despite increasing financial issues, Yahoo hired Marissa Mayer as CEO and President in 2012 in the hopes of turning around Yahoo’s fortune, just like her successful stint at Google. But this strategy backfired as well. Yahoo went through several rebranding exercises over the years and still was unable to craft a concise brand purpose.
In comparison, Google’s brand mission was a well-entrenched fact – to make information omnipotent and accessible to one and all. The organisation is committed to its mission till date even under its parent company Alphabet.
In its later years, Yahoo was solely operating under the necessity to catch up with technological advancements. The eventual downfall of Yahoo is also a case of a myriad missed opportunities, or rather acquisitions (eBay, YouTube, Facebook, Alibaba). Even today, past Yahoo employees ‘bleed purple’ and lament the lost potential of the company.
IBM Simon vs. Blackberry
Created by IBM, the Simon Personal Communicator was truly revolutionary at the time — it was the world’s very first smartphone. But it was a commercial flop and failed six months after its release. There are several reasons it did not take off.
The wireless carriers at that time were not prepared to deal with the intensive amounts of data the device required. This led to quick battery drains. Also, it was only marketed in the US and was exorbitantly priced. At just 20 years of age, it is undeniably a relic from another age, long consigned to the past. Nevertheless, the IBM Simon holds its own in history, even though it might be clunky as per contemporary standards.
What followed in 1984 replaced the IBM Simon like cakewalk. With its patented QWERTY keyboard and pioneering email services, BlackBerry became an instant favourite of the world’s rich and famous. RIM (Research in Motion), the company which launched the first-ever BlackBerry smartphone provided them on a free trial basis and also established several marketing partnerships. Owning a BlackBerry device became a status symbol, and BlackBerry addiction was a prevalent condition.
This example is a more straightforward case that delineates that an early entry does not warrant an invincible head start in the business. BlackBerry was a better product than IBM Simon in all respects.
Netscape vs. Internet Explorer
Netscape was a bona fide trailblazer in the field of web browsers. It came about when two men, Silicon Graphics founder Jim Clark and university graduate Marc Andreessen teamed up and decided to create Mosaic Communications in mid-1994, later renamed Netscape Communications. Netscape rapidly achieved overwhelming success by capturing a majority market share.
The competition was now brewing from the likes of Microsoft, which initially resisted entering the Web sphere. They saw an opportunity and bundled its own browser, Internet Explorer, free of charge with the Windows 95 operating system, in a move that eventually proved to be the undoing of Netscape.
The team at Netscape decided to rewrite their code from scratch. This led to version 5.0 never being released, while Netscape 6.0 was released after almost three long years. To make matters worse, 6.0 was released prematurely because of external pressure. The various versions made Quality Assurance difficult. This period was enough for competitors to take over the market, with Netscape’s market shares hitting rock bottom. By 2002, Internet Explorer was dominating the market with 96% shareholders.
The rapid pace of technological evolution and market expansion hampered the durability of Netscape’s first-mover-advantage. But it had an acute sense of when to exit the rat race. Netscape arranged to be acquired by AOL in a whopping 10-billion-dollar deal.
Netscape brought the internet to households. They started with a vision to change the world. They believed in it, and they did it. Until they did not.
In business, timing is everything. Assessing the target audience, collecting intel on the competitor’s performance, and then optimising strategy from the data is as imperative as maintaining a quality product and brand. Sometimes companies hold back from entering a new market category to let the first wave ride it out and figure out the pitfalls. This strategy reminds us of the intriguing words of a visionary, “Good artists copy. Great artists steal.” But this is still not a sure shot way to achieve success. You might not have the time to ensure technological prowess and end up playing catch-up. The only way to build an empire is to thoroughly know your market and your resources before taking the deep dive.
The first-mover has an advantage you say? It is rather the one who manages to survive that has the advantage.
