Why Do New Platform Technologies Fail ? The Paradox of Technological Superiority

Technological superiority provides more functional value for users, and is a critical dimension that challengers can leverage to dethrone incumbent technological platforms. We argue that while technological superiority might help accelerating adoption on one side of the market by driving early user adoption, it also causes greater innovation challenges for complementors who face time compression diseconomies due to the learning of the new technological environment. This limits their contribution of complementary products, which creates unfavorable expectations and slows down platform adoption. Eventually, these platforms fail. We develop this logic conceptually through a qualitative analysis of the US video game console industry. A number of studies have documented a puzzling result that it is often the inferior technology to become the dominant standard. In the context of platform markets, our study highlights that what is perceived as u0027superioru0027 from a technological perspective is in fact u0027inferioru0027 from an ecosystem perspective that accounts also for complementors. 2 We recognize that our technical architecture has initially made Sega Saturn more difficult to develop for than other next generation formats, including the Playstation. But that is also why we know that Sega Saturn is a superior gaming platform .