The document discusses the timing of entry for new products and compares the strategies of early (first) movers versus later (second) movers. It provides background on factors that influence entry timing, such as demand uncertainty and learning curves. The document then compares the first mover advantage of Blackberry's early entry into the smartphone market versus the second mover strategies of Apple's iPhone, which set new standards despite not being first. While first movers can capture large market share, constant innovation is needed to sustain advantages against second movers who can learn from mistakes and improve products.

1. Timing of Entry Dated : November 09, 2009
Timing of Entry
MOTIS – Class of 2009-10
Innovation & Knowledge Management
Report Prepared by
Monika Andersen - Salim Gouasmia
Abdullah Khan - Cristina Lorenzetti
ESIEE Management – MOTIS 1/8

2. Timing of Entry Dated : November 09, 2009
Table of Contents
Introduction.............................................................................................................................3
Entering a New Market ..........................................................................................................4
First & Second Mover Advantages & Disadvantages – iPhone & BlackBerry Compared.....5
Conclusion...............................................................................................................................7
Bibliography............................................................................................................................8
ESIEE Management – MOTIS 2/8

3. Timing of Entry Dated : November 09, 2009
Introduction
Timing is a very important strategic tool for companies when launching a product. Although many
would claim that being the first in the market is the best way to capture the market but there are
arguments for and against.
The timing of entry depends a lot on the Demand and Technology Uncertainty of any new product. 1
Initially, for any new product the technological features are always put to question. What will the
product do? What will be its features? These questions are usually followed by Market/Demand
uncertainty. Determining the segment, substitute and complementary products; all these become a
part of the pre-launch discussion.
When a new product is brought to a market, it takes some time for consumers to master the product.
There is a learning curve attached which will determine the longevity of the product. It is very
important for the producers to bring a product that is new and at the same time easy to use. Once the
product is initially accepted in the market, the producers get the chance to learn and make the
product efficient and effective.
The fact on how much time it will take for competitors to react and come-up is a key element. The
standard of the product, be it Open or Closed, has a role to play.2 Open standards tends to decrease
profit appropriation, rival imitate easily, increases buyer power and supplier power due to lower
switching costs and possible loss of control. Open standards also increase market acceptance.
However, Closed Standards tend to generate more market share and thus, increases revenue but
Government regulations and even non-Governmental Groups might put a barrier toward the growth
of the product. That being said, the company strength always remains a key factor on how the product
will be placed and accepted by the market. A tension always remains between Open and Closed
standards affected by market acceptance and value appropriation.3
All these being said above, these are only the pre-launch situations that make the agenda of a
boardroom. Depending on the culture and the situation of the company, a decision will be made on
whether to enter the market as a first mover or follow the market when someone else have already
made the entry and the company knows that there is a sure demand. In this paper, we will discuss a
little about how a company enters the market and how the first or the second mover approach affect
the success of the product.
1 Agarwal, Rajshree. Entry Timing, Standards Battles and Design Dominance.
<http://www.business.illinois.edu/agarwalr/EMBA/Class%204%20Timing%20of%20Entry.pdf>
2 Ibid.
3 Ibid.
ESIEE Management – MOTIS 3/8

4. Timing of Entry Dated : November 09, 2009
Entering a New Market
There are always some risks involved when a company decides to expand its business into a new
market. It needs to set the groundwork to make sure that the product is feasible and the timing is
right to enter the market. The biggest obstacles a company faces during their “road” to the new
market are the so called “entry barriers”4:
 Size of investment
 Advertising
 Control of resources
 Customer loyalty
 Inelastic demand
 Intellectual property
 Vertical integration
 Brand identity
 Distribution channels’
 Scale and experience economics
 Government policies
These are some of the points a company should consider before launching a product as the marketing
plan can make all the difference in having a successful product or not. When a company doesn’t pay
attention to all these factors, the risk is to incur in a failure.
The market can be considered a real “competitive arena” where each company competes in order to
be the best one. The right timing to market when referred to the competition level is very hard to set,
if there is a high competition it can be difficult. On the other side if there is no competition it means
that there is only one company/product in that market, it is the “unquestioned number one” 5 and it
can be very hard or even quite impossible to have success. If we consider the timing related to the
level of innovation, a company must be very careful of what is going on in the market, which products
is there the biggest demand for and which ones is there no demand for. To introduce a product that
doesn’t represent a need for the costumer is a big risk, since the direct consequence can be the total
absence of sales that can lead to the product failure, a loss of money, a waste of time and, in the worst
of cases, to the failure of the firm.
4 Langerak, Fred. Jan Hultink and Griffin, Abbie. Exploring Mediating and Moderating Influences on the Links among
Cycle Time, Proficiency in Entry Timing, and New Product Profitability May 2008. The Product of Innovation
Management. <http://www3.interscience.wiley.com/journal/120088945/abstract?CRETRY=1&SRETRY=0>
5 Ibid.
ESIEE Management – MOTIS 4/8

5. Timing of Entry Dated : November 09, 2009
First & Second Mover Advantages & Disadvantages – iPhone & BlackBerry Compared
When discussing innovation timing, there is the theory of the first mover and the second mover of an
innovative product.
Conventional wisdom and intuition suggests that if a company wants to win market share, it has to be
the first to enter the market, correct?
The first mover advantage theory states that the first company to enter a certain market will gain
massive market share. In addition, if the company has developed a competitive advantage as well, it
will also be able to defend its leadership position from new entrants. Furthermore, the first mover will
have the ability to establish customer loyalty and thereby securing their position in the market, just as
Harley Davidson has done. Moreover, a company can set the standards of the new market when it is
the first one to enter it.6
If it only requires that a company must be the first on a certain market, then what is the problem?
Even though you enter as the first one, it does not necessarily mean that you have figured out all the
angles. For example, there is the high risk due to the demand uncertainty that a company has not fully
accounted for as well as development costs that occurs when establishing a foothold in a new market.
As a result, the second mover will not have the disadvantages of high development costs. In addition,
the second mover will be able to learn the mistakes made by the first mover and be able to perform a
new market research to improve satisfying customer needs. Furthermore, the second mover will also
be able to gain time for Research & Development to develop a superior product. On the other hand,
their ability to establish a brand loyalty is unlikely to happen as a second mover.7
However, this theory does not apply for all innovations and markets. Andrew Groove, Intel’s ex-CEO,
argued that “The first mover and only the first mover, the company that acts while others dither, has a
true opportunity to gain time over its competitors; and time advantage, in this business, is the surest
way to gain market share”.
Time is of the essence in the IT industry. Innovations are unlikely to happen when you enter as a
second mover in the IT industry, since the IT innovations are becoming obsolete very quickly.
If we look at the case of two of the biggest brands in the mobile communication industry: Apple's
iPhone and RIM's Blackberry, we will see how both the first mover advantages (FMA) and second
mover advantage (SMA) can work.
Blackberry was the first brand that introduced mobile email that was compatible with the corporate
requirements in 2002. Although based in Canada, Blackberry quickly became the market leader. Even
though there have been other makers of smart phones before Blackberry such as the Palm, Blackberry
was the first brand that integrated mobile communication, internet capabilities and corporate email
6 Roll, Martin. First-mover advantage and branding: Apple versus BlackBerry. October 07, 2009. Official Weblog for the
book Asian Brand Strategy by Martin Roll. <http://www.asianbrandstrategy.com/2009/10/first-mover-advantage-and-
branding.asp>
7 Agarwal, Rajshree. Op,cit.
ESIEE Management – MOTIS 5/8

6. Timing of Entry Dated : November 09, 2009
into one simple hand held device.
Blackberry's leadership on the smart phone market was in June 2007 challenged by Apple with the
introduction of the iPhone.8 Despite competitors such as Motorola, Nokia, Sony Ericsson, and
Samsung, that strongly imitated many of Blackberry's features in similar looking handsets, Apple did
the completely unexpected thing. Apple created a completely new design with appealing features and
design.
The iPhone was very slim and handy with a large touch screen without a physical keyboard.
Furthermore, unlike Blackberry, Apple realized the integration of a mobile phone, a music player, an
internet browser, a digital camera, and a built-in GPS. In addition, the iPhone was connected to
iTunes, Apple's online store to purchase music and movies. As a result, Apple not only improved what
Blackberry had done, but also set a new standard within the smart phone market.
Although it was Blackberry that created the industry standard for almost five years, iPhone seems to
have changed those standards despite not having the first mover advantage.
This leads to a couple of important questions:
 Is the first mover advantage sustainable or only temporary?
First of all, nothing is sustainable forever. Even companies such as IBM had to throw in the towel after
years of industry dominance. However, sustainability is still very important for companies. Imagine if
all strategies were easily copied, then the competition would be more than just complete as said in
“marketing terms”, it will probably lead to a zero sum game, meaning that no one will make money.
The first mover advantage clearly creates a very significant advantage. Early entry into a market allows
early market penetration into different segments. Similarly, in this case, Blackberry was able to define
the industry standard by being the first. However, iPhone not only matched those standards by
including all the features that Blackberry offered, but also improved every single one of them. As such,
innovation and customer insight helped Apple to redefine the standard in the industry.
Now one can ask these questions:
 Are the second movers meant to fail? Most certainly not.
 How can companies carry out strategic initiatives to overcome the first mover disadvantages?
Companies can undertake certain strategic initiatives to overcome competitors’ first mover
advantages. As the example given above, Apple primarily matched the industry standard, but was also
innovative at the same time.
In conclusion, constant innovation helps a company to improve the status quo of an industry and
allows it to overcome a competitor’s first mover advantages. In addition, building strong brands is a
very important and necessary strategy. Despite Blackberry's first mover advantage, Apple's brand
8 Roll, Martin. First-mover advantage and branding: Apple versus BlackBerry. October 07, 2009. Official Weblog for the
book Asian Brand Strategy by Martin Roll. <http://www.asianbrandstrategy.com/2009/10/first-mover-advantage-and-
branding.asp>
ESIEE Management – MOTIS 6/8

7. Timing of Entry Dated : November 09, 2009
equity was so strong with cult promotion, that it allowed the iPhone to overcome the first mover
advantage of BlackBerry.
Conclusion
Entry timing can either make or break an innovation. According to a study made by Wiley InterScience
regarding Product Innovation Management, market-entry timing depends on the new product's
development cycle time, which is the elapsed time from the idea generation phase to the phase
where the new product is ready for market introduction.
To determine the right moment of entry, a firm needs to correctly balance the risks of early entry and
the missed opportunity of late entry.
Hence, proficient market-entry timing is therefore defined as the firm's ability to get the market-entry
timing right, meaning neither too early nor too late.9
9 Langerak, Fred. Jan Hultink and Griffin, Abbie. Exploring Mediating and Moderating Influences on the Links among
Cycle Time, Proficiency in Entry Timing, and New Product Profitability May 2008. The Product of Innovation
Management. <http://www3.interscience.wiley.com/journal/120088945/abstract?CRETRY=1&SRETRY=0>
ESIEE Management – MOTIS 7/8

8. Timing of Entry Dated : November 09, 2009
Bibliography
• Socco, Daniel. First Mover Advantage Revisited. August 21, 2009. Innovation Zen. November
04, 2009. <http://innovationzen.com/blog/2006/08/21/first-mover-advantage-revisited/>
• Agarwal, Rajshree. Entry Timing, Standards Battles and Design Dominance. December 28,
2007. November 05, 2009. <http://www.business.illinois.edu/agarwalr/EMBA/Class
%204%20Timing%20of%20Entry.pdf>
• Roll, Martin. First-mover advantage and branding: Apple versus BlackBerry. October 07, 2009.
Official Weblog for the book Asian Brand Strategy by Martin Roll. November 05, 2009.
<http://www.asianbrandstrategy.com/2009/10/first-mover-advantage-and-branding.asp>
• Kaneshige, Tom. Why Apple Owns the High-End: First Mover Advantage. August 06, 2009.
CIO.com. November 05, 2009.
<http://www.cio.com/article/499151/Why_Apple_Owns_the_High_End_First_Mover_Advanta
ge>
• Claude-Gaudillat and Quélin V., Bertrand. Mode of Entry into a New Market: Does the Timing
of Entry and/or Effect of Innovation on Competance Matter? 2006. Ceram.edu. November 05,
2009.
<http://www.cio.com/article/499151/Why_Apple_Owns_the_High_End_First_Mover_Advanta
ge>
• Basher, Syed A. and Ahmed, Saber Mahmud. Externality and Timing of Entry in Oligopoly
Models. 1997. Tufts University. November 05, 2009. <http://www.intertic.org/Theory
%20Papers/Saber1.pdf>
• Langerak, Fred. Jan Hultink and Griffin, Abbie. Exploring Mediating and Moderating
Influences on the Links among Cycle Time, Proficiency in Entry Timing, and New Product
Profitability May 2008. The Product of Innovation Management. November 05, 2009.
<http://www3.interscience.wiley.com/journal/120088945/abstract?CRETRY=1&SRETRY=0>
ESIEE Management – MOTIS 8/8