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Unformatted text preview: f f erings. If no t, they reenter a market at installed-base
zero and give up a majo r so urce o f advantage—the switching co sts built up by prio r custo mers. Fo r
example, when Nintendo intro duced its 16-bit Super Nintendo system, it was inco mpatible with the
f irm’s highly successf ul prio r generatio n 8-bit mo del. Rival Sega, which had entered the 16-bit
market two years prio r to Nintendo , had already built up a large library o f 16-bit games f o r its
system. Nintendo entered with o nly its debut titles, and no ability to play games o wned by
custo mers o f its previo us system, so there was little incentive f o r existing Nintendo f ans to stick
with the f irm.M. Schilling, “Techno lo gical Leapf ro gging: Lesso ns f ro m the U.S. Video Game
Co nso le Industry,” Califo rnia Management Rev iew , Spring 2003. Backward co mpatibility was the centerpiece o f Apple’s strategy to revitalize the Macinto sh thro ugh
its mo ve to the Intel micro pro cesso r. Intel chips aren’t co mpatible with the instructio n set used b...
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- Winter '14