A study on the standards in optical storage device industry

Abstract

Standards have been a very important issue in many industries as the innovators of the standard technology have tremendous power in the industry. The standard holders are supposed to have the dominant market position and technology leadership for further generation of the product as well as direct royalty income from the intellectual property. However, other various forces are also included in the evolution of the market and the technology. This thesis deals with the issues related to the evolution of standards in the optical storage device industry and other forces leading the market competition. Philips and Sony, the innovators of the CD technology, had taken the technology leadership of the industry for more than a decade. However, early followers such as Toshiba, Hitachi, and Panasonic took the leading position of the market, and competed with Philips and Sony for the standardization of DVD. The increased number of participants and the influence of complementors made the DVD standardization process much more complex. This trend will continue as current market leaders, who are late entrants, are added to the standard competition. This case shows that not only taking advantage from standardization but also proper market entry timing and continuous innovation is important for success in the optical storage market.