UCL School of Management

Research seminar

Market Leadership Through Intergenerational Installed Base


Tobias Kretschmer, Ludwig Maximilians Universitat, Munich


Friday, 14 November 2014
11:00 – 12:30
Executive Education Suite, Engineering Front Building, Malet Place, London WC1E 7JE

Market leadership through intergenerational installed base: The case of the U.S. handheld video game industry

The introduction of a new product generation forces incumbents in network industries to rebuild their installed base to maintain an advantage over potential entrants. Using two different datasets on the U.S. market for handheld game consoles, we show that incumbents can to some extent substitute for rebuilding their new installed base by making their new products backward compatible, which lets them draw on the installed base of the parent generation. However, doing this also reduces supply of new software. We examine the tradeoff between technological progress and parent installed base and find that parent installed base matters less if there is a large technological leap between two generations. We then discuss the role of transferring an installed base as a strategy to sustain market leadership.

Last updated Tuesday, 25 November 2014