Firm's Innovation Expectation, Potential and Actions: Impressions on the Japanese Videogame Console Market

Abstract

From the major assumptions proposed by the Theory of the Firm, it is possible to understand the firm as the primary site for innovation. Innovation efforts are justified by the vital need of any firm to generate enough solutions to be validated in the market. All along the market validation process, one can identify the life cycle of the innovation, easily represented by an "S-curve". Whether due to the new solution's success in terms of sales, market share or technological improvements, there is a sequence of stages that are, invariably, repeated in all technologies: startup, development and maturity. This paper presents, based on an S-curve model for innovation expectation and potential, the analysis of the major players (Nintendo, Sony and Microsoft) actions in the Japanese videogame console market. The most interesting findings are that firms launch new products somewhere just before the inflexion point of the previous S-curve, and stress the life cycle of each on-going technology by keeping, simultaneously, different versions of the consoles.