Strategic Timing of Entry in Technology-Intensive Industry

In many technology-intensive industries, the quality of products offered by firms is constrained by the evolution of a core technology. Therefore, incorporating advanced technologies in new products entails delayed product introduction. However, an early launch of a new product provides a firm several enduring advantages such as larger market presence and greater availability of complements. It can often be seen that competing firms often take different roles as early leaders or technology leaders by entering a market at different times; this allows them to utilize entry timing as an additional dimension to differentiate themselves from their rival and as a significant strategic tool to compete.

A major problem of innovative companies is that they wrongly estimate market and consider their technology as undefeatable and a must have. Hence unrealistic expectations and the wrong entry, especially in terms of timing will lead to the failure of a technology. Technological innovators therefore need need great caution for future opportunities.

The analyses of historic and current company strategies and the theory shows, that timing is significant part of the innovation and deployment strategy. If a company decrease deployment cycles they will decrease costs and can increase their timing of entry options. Strategically a company can use timing strategies to take advantage of business cycles and seasons by ensuring production capacity and complementary goods and services are at place. A good example for that is the success of several companies offering and launching game consoles in winter before Christmas. This of course presupposes stable production and adequate supply and distribution to success which for example Sony with the Playstation managed but Sega with the Saturn didn't. If a product is profitable, the next generation product can be delayed in order to maximize return on investment and simultaneously refine the next generation product. In industries that are driven by technological innovation a delayed entry or introduction of next generation product can result in losing market share and ca help competitors to achieve significant technological gap and market position. On the other hand a company that cannibalizes their own existing products by innovations makes it hard for competitors to compete and enter the market because they are increasing incentives to upgrade to own products which increases increase switching costs. A perfect example is provided by Apple which launches new products and refined versions in very short cycle times thereby making it nearly impossible for competitors to catch up. The latest product example by them was the iPad 2 launched nearly not even a year after the launch of the first iPad generation.

To conclude, firms that fail to understand the customer demand and the extent of competition might emphasize the wrong dimensions in making entry decisions.