Research pick: Setting international standards - "The strategy of repeated ‘open’ and ‘narrow’ approaches for standardised media"

Haruo Awano of Sugimura & Partners and Koji Tanabe of the Tokyo Institute of Technology, Tokyo, Japan, have looked at the strategy of repeated ‘open’ and ‘narrow’ approaches for standardised media in the context of market expansion where markets utilise international standards. Standardisation leads to the faster spread of a given technology and allows easy entry for many competitors into the market. Of course, this has a detrimental effect on the bottom line of the pioneering companies that invent a given technology as competition means price erosion. It is no surprise that so many electronics companies devise device-specific proprietary and patented peripherals, connectors, and power supplies for the products to help them retain a niche in the market and ward off those companies that would seek to use the existence of standards to circumvent the patents legitimately.

The team points out that there are still opportunities for innovators and inventors. They have now looked at the case of Sony and its 130 mm magneto-optical (MO) media and how the company could take advantage of its intellectual property even in the face of competition using the same technical standards to create rival products.

Fundamentally, one approach that can be taken is to build an entry barrier by creating a market in demand for highly reliable media, so that cheap competitors are ignored in the face of the more well-known product with a greater reputation. A second strategy is to simply update the pioneering product, with new innovation. In the case of MO media, doubling capacity periodically, for instance, while continuing to standardise. Competitors must then play catchup while the pioneer continues to reap the rewards of its intellectual property in new sales to the market. A market that is at once open to competition through standardisation is thus once more narrowed by innovating anew within the same format and niche.

Awano, H. and Tanabe, K. (2018) ‘The strategy of repeated ‘open’ and ‘narrow’ approaches for standardised media’, Int. J. Technology Management, Vol. 78, No. 4, pp.261–279.