This paper argues an excellent manufacturer as a major player in an existing market fails to adapt to drastic change of value dimension. Drastic change of value dimension may have similar work to incumbent’s failure in Christensen (1997). In the paper, we discuss of an empirical case of fundamental change of competition circumstances in consumer portable audio player market. For long decades, Sony had strong advantage of Walkman. Brand advantage of Walkman is not an only reason of Sony’s advantage, but launching new technology at regular intervals is also the origin of the advantage. Cassette tape, Compact Disc, and Mini Disc, such new technologies had appeared in the market by turns. The new products’ advantages are basically the values from specifications and features realized by advanced technologies. Therefore, Sony had defined audio players’ value as such quantitative specifications and features. Apple has, however, launched iPod around 2000. Apple has defined their products’ value as different direction from Sony. iPod’s advantage is emotional and qualitative value from unique cosmetic design and unique user interface. Apple might not think the traditional specifications and features aren’t priority in their R&D. Changing value direction is basic and strong advantage of Apple as a new comer. This paper shows Sony might also realize Apple’s new value direction. Why hasn’t Sony adapted to that? Sony had to pile up in the existing market and expectation of existing customers. That’s the difference between Sony and Apple. The market prices of 2 brands’ products were equivalent criteria to define the R&D budget. Under equivalent budget criterion, it must be issue of allocation of resources, as same meaning as Pareto optimality, whether to invest to traditional value or to invest to creating new non-functional value. The further Sony satisfied the existing customers’ needs, they couldn’t became to invest their R&D resources into creating new value. This paper called the dilemmatic value change “product concept innovation.”
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