Jeffrey L. Funk

Market- and committee-based mechanisms in the creation and diffusion of global industry standards: the case of mobile communication

Abstract The existing literature on industrial standards almost exclusively focuses on pure market competition; this paper shows how and why both governments and firms have had a strong effect on the creation of global standards in the mobile communication industry through a hybrid system of committees and markets. According to our model, governments can and did influence forecasted and actual installed base for systems in the mobile communications industry through their influence on product demand (e.g., by determining the amount of competition in the market) and the number of and degree of openness in the standards. In particular, the choice of a single standard (by either a large single country or region) dramatically and instantaneously increased the forecast for the standards domestic installed base, thus causing other countries to also adopt the standard.

Standards, dominant designs and preferential acquisition of complementary assets through slight information advantages

Abstract This paper discusses how firms can use slight information advantages to obtain preferential access to complementary assets and create multi-level dominant designs. It does this by using an analysis of several cellular phone industries and the literature on standards and dominant designs. In the most prominent case, the leading Japanese cellular service provider (NTT DoCoMo) offered preferential information about the “open” Japanese digital phone standard in return for preferential access to the lightest phones from four phone suppliers. These four phone suppliers used the preferential access to this information to obtain preferential cooperation from parts suppliers and to make better design tradeoffs between parts than the other phone suppliers. These superior design tradeoffs enabled the DoCoMo suppliers to create various dominant designs within the Personal Digital Cellular (PDC) standard. The creation of these dominant designs forced other phone and part manufacturers to change their design strategies and copy the designs used by the DoCoMo phone and part suppliers. The result is that DoCoMo and its four phone suppliers have substantially reversed the slides in their market shares. By comparing this case with several other cellular phone industries in which different modes of competition exist, the paper discusses how market conditions determine the way in which standards and dominant designs emerge.

Key technological trajectories and the expansion of mobile Internet applications

This paper describes the key technological trajectories and their potential effect on the expansion of mobile Internet applications. The initial success of entertainment content in Japan in 1999 caused manufacturers to introduce phones with color displays, polyphonic tones, cameras, and Java programs, and these functions are supported by other technological improvements like faster microprocessors, larger memory, and faster network speeds. Coupled with an evolution in user behavior, these technologies are making the phone a portable entertainment player, a new marketing tool for retailers and manufacturers, a multi‐channel shopping device, a navigation tool, a new type of ticket and money, and a new mobile intranet device. These trends will have a large impact on competition in the global mobile phone market as dominant designs emerge at the global level.

The product life cycle theory and product line management: the case of mobile phones

This paper applies the product life cycle theory to the issue of product line management with two goals in mind: 1) to understand how product line management evolves over the life of an industry and 2) to compare Kleppers model (1986), which emphasizes economies of scale, with the traditional model of the product life cycle, which emphasizes dominant designs. We find that Kleppers model of the product life cycle theory in combination with the concept of product line management provides a better explanation for the evolution of competition in the mobile phone industry than the traditional product life cycle model. We use Uzumeri and Sandersons classifications of product variety and change (Uzumeri, 1995) to generalize from the industry case.

Concurrent engineering and the underlying structure of the design problem

This paper argues that the operationalization of concurrent engineering depends on the underlying structure of the design problem. It makes this argument by looking at existing contingency models of product development and by showing how concurrent engineering is operationalized in three different Japanese industries. The data from the three industries suggest that the three existing contingency models of product development do not fully represent the variety of ways in which the underlying structure of the design problem can be characterized and thus the ways in which concurrent engineering can be operationalized.

TECHNOLOGICAL CHANGE WITHIN HIERARCHIES: THE CASE OF THE MUSIC INDUSTRY

This article uses the music industry to demonstrate a model of technological change that explains the sources and timing of technological discontinuities and dominant designs. The process by which firms translate customer needs into products can be represented in terms of an interaction between customer choice and product design hierarchies. Technological improvements at lower levels in the product design hierarchy can change the design tradeoffs and thus affect movements up and down the hierarchies. Movements up the hierarchies lead to the emergence of new product classes (i.e., technological discontinuity) whereas movements down the hierarchies may result in the emergence of a dominant design in a specific product class.

The origins of new industries: the case of the mobile Internet

This paper describes a model of new industry formation that is based on evolutionary theories of technical change. It represents the origins of new network industries as the interaction between multiple technological trajectories that are specific to a particular technology or broadly defined technological regime. The speed with which these multiple trajectories cause industry formation depends on their effective application to the most economical applications; this process occurs through the interaction between design hierarchies and market concepts. Growth in these initial applications causes sub-trajectories or sub-regimes, where competition in the new industry initially takes place, to emerge from the main trajectories. The model is applied to the mobile Internet, an industry that has just started to grow particularly in Japan and Korea.

Notes from Toyota-Land: An American Engineer in Japan

The article reviews the book “Notes from Toyota-Land: An American Engineer in Japan,” by Darius Mehri.