Dr. Scott Gallagher's Research Named 2013 Best Practitioner Paper
Recently, Management department head and professor Dr. Scott Gallagher won the 2013 Best Practitioner Paper Award for his article titled, “The Battle of the Blue Laser DVDs: The Significance of Corporate Strategy in Standards Battles.”
The article, published in Technovation, argues that dueling companies should utilize parallel industries to win competitive standards battles. To support his contention, Gallagher studied the battle between Sony’s Blu-ray and Toshiba’s HD-DVD for the next generation of DVD players.
After analyzing the product preannouncements, pricing, and availability of complements for both Sony’s Blu-ray and Toshiba’s HD-DVD, Gallagher found that Sony won the standards battle over Toshiba thanks to Sony’s corporate strategy which allowed for Blu-ray to be used not only in DVD players, but also in the PS3 game console systems.
While Sony won the battle, Gallagher's research indicates that the price of the win was too high since Blu-ray costs more to manufacture and has generated lower numbers in market revenue compared to HD-DVDs. According to Gallagher, a standards battle forces companies to focus on profits, particularly in cases involving technology that continually evolves. His article warns that if companies do not focus primarily on profits, the cost of winning the battle may be too high to win the industry war—as in the case of Sony’s Blu-Ray.
In response to his findings, Gallagher proposes a heuristic to help companies assess the strengths of indirect network effects in their industry—information that could prove invaluable in a standards battle.
Through his research, Gallagher is opening discussion for managers, practitioners, and scholars about the relation of network effects and parallel industries in market competition.
Gallagher’s full article can be found at:
Gallagher, Scott. 2012. “The Battle of the Blue Laser DVDs: The Significance of Corporate Strategy in Standards Battles.” Technovation. 32: 90 - 98.