The Blu-ray disc and the HD-DVD optical disc had a fierce format war between them for a long time. The Blu-ray is Sony’s technology while HD-DVD is Toshiba’s. The technological battle between Sony and Toshiba is precipitated by the urge of each of the two companies to take control over video format in the next generation.
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Sony’s technology has the support of companies such as Hitachi and Philips, while Toshiba’s technology is supported by the DVD Forum, which feels that HD-DVD is in the best position to succeed the DVD format. Unfortunately, the format battle has left the major consumers, retailers and producers of these technological inventions confused.
The three categories of users, for their own reasons, appeared to favor the Blu-ray technology more than the HD-DVD for a number of reasons (Schilling 2008). This paper uses the concept of multiple dimension of value to explain the push factors behind the preference. The paper also outlines some of the techniques that a firm can apply to improve the overall performance of its technology and design.
The concept of multi dimensions of value (MDV) affects the behavior of consumers and other users towards a particular product. The MDV concept is divided into three main components: availability of complementary products, size of the installed base and availability of complementary goods.
The MDV influences the way new firms enter the market and how they prosper after the entry. Firms that follow this concept strictly understand that their success as new entrants into the market depends on their ability to develop technology that results in more total value than what is yielded by the technology used by the current players (Schilling 2003).
A firm with a new technology may succeed in the market if it is able to develop it in a way that it remains compatible with the current complementary goods and installed base. The compatibility involving new technology and the existing complementary goods as well as the installed base, is necessary as it enhances a firm’s ability to offer technological functionality to its users.
However, if a new entrant cannot build such compatibility, it can succeed through an intense technological functionality competition. In this case, the firm must ensure that its technology offers better value than that of the existing ones (Schilling 2003).
The customers consider a number of options when comparing the advantages of a new technology to a current one. The main factors that customers consider include: subjective information, objective information, and future expectations.
A combination of these three factors assist customers to evaluate a new technology based on the components of MDV. In this case, if the installed base of a new technology is perceived to be of greater value than the existing technology, the customers’ preference for the new technology grow stronger (Schilling 2003).
Why the 3 Players Prefer Blu-Ray to HD DVD
There are several reasons that make consumers, retailers, and movie producers support the Blu-ray disc as opposed to the HD-DVD type. The push factors are purely MDV based; the main MDV factor that influences the Consumer’s preference forBlu-ray is the concept of complementary goods.
A large number of consumers prefer Blu-ray technology because it is cost effective and easier to use. The Blu-ray technology is compatible with other technologies such as the one used in the HD DVD discs. The customers maintain that since the Blu-ray technology is compatible with the current complementary goods such as the DVD, it assists them to lower switching costs while using it (Schilling 2003).
In addition, the consumers prefer the Blu-ray disc to the HD DVD one because of the enhanced video-compression techniques used in it. The techniques used for compressing the videos in the Blu-ray discs give images that are richer in color and contrast. The Blu-ray disc has better techniques of enhancing the transformation of information from satellite to HD. The Blu-ray is now ranked the highest technology in video-quality format (Schilling 2008).
The retailers’ preference for Blu-ray to HD DVD can be explained using the installed base concept. The retailers feel that the Blu-ray technology is compatible with many other technologies, making it have multiple uses. As result, the retailers feel that the Blu-ray disc is easier to sell than the HD DVD one as many customers are likely to buy it.
The fact that Sony offers the Blu-ray discs at a huge discount also promotes the adoption of complementary goods among the users. The huge discount encourages alliances with other technologies, which assist to minimize customers’ resistance. All these measures enlarge the installed base for the Blu-ray technology, which in turn encourages more people to have its discs (Tallman 2007).
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Movie producers prefer the Blu-ray technology to HD DVD because they have realized that it the dominant design and want to produce their movies according to what they feel would sell more. The Blu-ray technology, due to its compatibility with a number of technologies, sells more than the HD DVD.
The Blu-ray technology is also easy to use and has provisions that make content recording easier. These advantages make the Blu-ray disc more dominant than the HD DVD one. Consequently, most producers prefer to use the Blu-ray format in their production as they are certain that their movies are likely to sell more as opposed to when they produce them in HD DVD discs (Pavlik 2008).
Technology and Dominant Design
There are several ways through which a firm can make its technological product a dominant design. Firstly, a firm can use its complementary assets and credibility to become dominant in a particular industry. In this case, the firm is supposed to use its manufacturing abilities and its good name to obtain the full benefits of technological advancement.
For instance, Sony Company has been able to acquire better technological benefits than the new companies that enter the electronics’ industry. Sony has found it easy to dominate the industry as a result of the vast experience that its experts have and the company’s reputation (Suarez 2004).
A firm can also use its strategic maneuvering to improve its technology and to make a dominant design. There are three main instruments that a firm can use to improve its technology.
The most important ones include: an effective pricing strategy, a proper timing evaluation at the time of entry into a particular industry, and effective marketing strategies and public relations that take into consideration the interests of the customers. The two tools can assist a company to establish a larger pricing base, which is important in advancing its technological status (Harrington 2009).
Lastly, a firm can use the size of its customer base to enhance its technological status and dominant design. The size of the installed base is the most effective tool that a firm can use to influence the results of a technological dominance war. The firms that have a more established and large installed base have better chances to adopt specific technology that suits their operations.
Most firms design their products according to the customer base they have; this is associated with the previous technological know-how that the firm’s experts have acquired in the past (Suarez 2004).
Sony Blu-Ray Technology and its Dominant Design
The Sony Blu-Ray technology became the dominant design through a tactful application of different techniques. Firstly, the management of Sony ensured that there was a proper compatibility between the changes in its technology and the existing techniques that were used in the Blu-ray disc.
The Sony Blu-ray technology was designed in such a way that it was totally incompatible with the other technological concepts that its competitors used. This strategy assisted the firm to strongly compete against the existing firms and the new ones that tried to venture into the electronics’ industry (Schilling 2003).
Sony also applied attractive alliances and better licensing policies, which defined how it should relate with the manufacturing companies dealing in complementary goods. The well defined relationship between Sony and the manufacturers of the devices that were complementary to Blu-ray technology at the time assisted the company to create an environment that encourages negotiation, joint promotion and development of new technology (Bidgoli 2010).
Sony has on many occasions entered a joint promotion with manufacturers of complementary goods. The last joint promotion that Sony engaged in was with Sega; it was a great success as it added great value to the brand’s goal of becoming the dominant design in the industry (Schilling 2003).
Lastly, the Sony Blu-ray technology managed to become the dominant design by using signaling to shape perceptions and expectations of the company and its customers. Sony applied this strategy to enlarge its installed base; the firm also used the strategy to influence the operations of the manufacturers of complementary goods.
The firm used signaling to shape the expectations of the consumers, retailers, and movie producers. The firm was able to effectively signal the market about the looming technological battle and made all the stakeholders believe that it was capable of winning the war. This demoralized its competitors as they believed that the Sony Blu-ray disc was definitely going to win the battle; this gave Sony an opportunity to become the dominant design (Schilling 2003).
The Blu-ray and HD-DVD optical discs have had a technological conflict between them for a long time. The Blu-ray and HD DVD are technologies of Sony and Toshiba respectively. The main factor that caused the battle between these companies is their quest to take over the control of video format from DVD. Sony through its Blu-ray technology seems to be the dominant design as most consumers, retailers, and movie producers prefer its products to HD DVD discs.
The concept of multi dimensions of value can be used to explain this preference. The main components of the MDV that directly influence the preferences of the three players include: availability of complementary products, size of the installed base, and availability of complementary goods. The MDV concept also explains why Sony has become the dominant design with its Blu-ray technology.
Bidgoli, H 2010, The handbook of technology management, John Wiley & Sons, Hoboken, NJ.
Harrington, JL 2009, Technology and society, Jones and Bartlett Publishers, Sudbury, MA.
Pavlik, JV 2008, Media in the digital age, Columbia University Press, New York, NY.
Schilling, MA 2003, ‘Technological leapfrogging: lessons from the U.S. video game console industry’, California Management Review, vol. 45, no. 3, pp. 6-32.
Schilling, MA 2008, Strategic management of technological innovation, McGraw-Hill Irwin, Boston, MA.
Suarez, FF 2004, Battles for technological dominance: an integrative framework, Research Policy, vol. 33, no. 1, pp. 271-286.
Tallman, SB 2007, A new generation in international strategic management, Edward Elgar, Cheltenham.