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Detecting Dominant Designs Applying the theory in Network Economies

Dominant designs have been shown to affect the ground rules upon which competitive forces behave within an industry (Suarez & Utterback, 1995). The effects of a dominant design can be so profound as to cause the demise of firms that do not detect the dominant design early and, as a consequence, do not adopt it for their products (Christensen et al., 1998). Therefore it is in the best interests of the management of technology producing firms to develop methods to detect the emergence of a new dominant design that may disrupt their business. Existing research has added to our understanding of the forces contributing to the success and failure of technologies and firms, especially in fast-paced technology industries (Brown & Eisenhardt, 1997; Christensen et al., 1998; Cusumano & Yoffie, 1998; Eisenhardt & Brown, 1998; Suarez & Utterback, 1995; Teece, 1986; Tushman & Anderson, 1986). However, very little has been written to develop factors, based on technological change research, to assist managers in understanding the forces influencing the emergence of a dominant design. The paper derives a framework for the emergence of a dominant design from the literature and applies it to the Internet software industry. This is accomplished through an indepth examination of the web server industry. Particular attention is given to factors important in network-based economies including network effects, standards, complimentary assets and technological change. A complete examination of the web server industry from its origins in the Internet through to today's web server market dominated by the products of two main software development methodologies, open-source and proprietary-executable only provides interesting insights into the application of the emergence framework. The paper concludes with an emphasis on understanding the importance of standards, network effects and complementary assets in industries where open standards play an important role in the evolution of technology.