12 Questions
What is a key factor in determining a firm's likelihood of success in an industry?
The timing of the firm's investment in new technology development
What is a characteristic of an industry with increasing returns to adoption?
A technology that is adopted early may rise in market power
What was the outcome of IBM's adoption of Intel's 8088 microprocessor in its PC introduction?
Intel's dominant position was secured
What was the significance of Bill Gates and Paul Allen's development in 1975?
They showed that Intel's microprocessor could run a version of BASIC
How were applications developed for BASIC optimized?
They were optimized for Intel's architecture
What is a common outcome of self-reinforcing positive feedback mechanisms in an industry with increasing returns to adoption?
The entrenchment of a dominant design
What is the significance of being an early provider in an industry characterized by increasing returns to adoption?
Being an early provider allows a technology to rise in market power through self-reinforcing positive feedback mechanisms, culminating in its entrenchment as a dominant design.
How did the adoption of Intel’s architecture by computer enthusiasts contribute to Intel’s success?
As BASIC was adopted and applications developed for it, the applications were simultaneously optimized for Intel’s architecture, further increasing its market power.
What role did IBM play in securing Intel’s dominant position in the market?
IBM’s adoption of Intel’s 8088 microprocessor in its PC introduction secured Intel’s dominant position.
What is the relationship between the development of new technology and the likelihood of a firm’s success in an industry with increasing returns?
The timing of a firm’s investment in new technology development is critical to its likelihood of success.
What is the significance of Ted Hoff’s invention of the first microprocessor in 1971?
It marked the beginning of Intel’s development of microprocessor technology, which ultimately led to its dominant position in the market.
How did the development of BASIC by Bill Gates and Paul Allen contribute to Intel’s success?
Gates’s BASIC became widely circulated among computer enthusiasts, and as it was adopted, applications developed for it were optimized for Intel’s architecture.
Study Notes
Timing of Investment in New Technology
- Investment timing is critical to a firm's success in an industry with dominant design pressures
- Early adoption of technology can lead to powerful advantages through self-reinforcing positive feedback mechanisms
Increasing Returns to Adoption
- Early adoption can culminate in a technology becoming the dominant design
- Market power increases through self-reinforcing mechanisms
Intel's Dominant Position
- Intel's Ted Hoff invented the first microprocessor in 1971
- Bill Gates and Paul Allen demonstrated the microprocessor's capabilities with BASIC in 1975
- Gates's BASIC became widely circulated among computer enthusiasts
- Applications developed for BASIC were optimized for Intel's architecture
- IBM's adoption of Intel's 8088 microprocessor in its PC introduction secured Intel's dominant position
- Each of Intel's subsequent generations of products set the market standard
Timing of Investment in New Technology
- Investment timing is critical to a firm's success in an industry with dominant design pressures
- Early adoption of technology can lead to powerful advantages through self-reinforcing positive feedback mechanisms
Increasing Returns to Adoption
- Early adoption can culminate in a technology becoming the dominant design
- Market power increases through self-reinforcing mechanisms
Intel's Dominant Position
- Intel's Ted Hoff invented the first microprocessor in 1971
- Bill Gates and Paul Allen demonstrated the microprocessor's capabilities with BASIC in 1975
- Gates's BASIC became widely circulated among computer enthusiasts
- Applications developed for BASIC were optimized for Intel's architecture
- IBM's adoption of Intel's 8088 microprocessor in its PC introduction secured Intel's dominant position
- Each of Intel's subsequent generations of products set the market standard
Understand the importance of timing in adopting new technology and how it can lead to market power and dominant design. Learn about the role of self-reinforcing mechanisms and how companies like Intel have leveraged them to achieve success.
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