The Art of Standards Wars

• Published in: California management review Vol. 41; no. 2; pp. 8 - 32
• Main Authors: Shapiro, Carl, Varian, Hal R.
• Format: Journal Article
• Language: English
• Published: Los Angeles, CA University of California Walter A. Haas School of Business 1999; SAGE Publications; University of California, Graduate Schools of Business Administration
• Subjects: Color television; Colors; Competition; Consumer goods industries; Corporate Strategy; Corporations; Emerging technology; Evolution; Information technology; Intellectual property; Management; Military strategy; Networks; Strategy; Technological change; Technological revolutions; Technology; Track gauge; War
• ISSN: 0008-1256; 2162-8564
• DOI: 10.2307/41165984

Competition in the information age often takes the form of a standards war: a battle for market dominance between incompatible technologies. A company's success or failure can easily hinge on its ability to wage such a standards war. Standards wars are especially bitter in markets with strong network effects, where consumers place great value on compatibility and interconnection with each other. These markets tend to exhibit positive feedback and "tip" to a single winner. Based on a study of dozens of standards wars going back over 100 years, this article offers a "battle guide" for waging a standards war. After classifying standards wars and identifying seven key assets that firms can use to successfully establish a new technology, the authors recommend three tactics in standards battles: building alliances, exploiting first-mover advantages, and managing consumer expectations.