In: Computer Science
A single product or process architecture that dominates a product category usually 50% or more of the market. A dominant design is a de facto standard, meaning that while it may be officially enforced or acknowledged, it has become a standard for the industry. Are dominant designs beneficial for competitors, consumers, complementors, and suppliers?.
Are dominant designs beneficial for competitors, consumers, complementors, and suppliers?
With regard to consumers this question can be rephrased as: Are winner-take-all markets good for consumers? The answer is yes if the benefits accrued by consumers through widespread adoption of a technology outweighs the costs associated with a monopoly (e.g. higher prices, less product, variety, etc.). Of course the answer is no if the benefits accrued do not outweigh the costs.
With regard to competitors the answer is no unless the technology is “open” (not protected by intellectual property rights) or your firm is the owner of the technology that becomes the dominant design. Firms that do not have their technology adopted lose their investment in their technology and also have to play catch up in order to compete with the firm that owns the dominant design. The firm that owns the technology that becomes the dominant design benefits from high returns and their ability to affect the technologies development trajectory further supporting their dominant position in the industry.
With regard to complementors and suppliers the establishment of a single dominant design is likely to reduce their power as suppliers, but also reduces the market uncertainty they face and the eliminates the cost of trying to support multiple competing technologies. Complementors often require support from the firm that owns the technology (such as the releasing of computer code). Complementors can benefit from the establishment of a dominant design by not wasting resources developing for other platforms that do not thrive and from an expanded market for their products. Other suppliers could have pricing power reduced unless they themselves are a monopoly.