Netscape, which once controlled more than 80 percent of the market share in Web browsers, lost its dominant position when customers migrated to Internet Explorer, Microsoft's Web browser. Internet Explorer was to install and had no significant differences in terms of usability. This example serves to illustrate that:
A) fast-following smaller firms are always ready with newer and possibly superior products.
B) customers of technology companies are becoming increasingly savvy and more demanding.
C) the open source nature of technology ensures that no firm can expect to monopolize a market.
D) firms need to employ increasingly stringent intellectual property norms to guard against infringements from smaller, competitive rivals.
E) firms with low switching costs can sometimes be rapidly overtaken by strong rivals with additional competitive advantages.

Question

Quizplus · Accepted Answer

The example of Netscape and Internet Explorer illustrates how firms with low switching costs (in this case, switching from one browser to another) can be quickly overtaken by competitors (Microsoft's Internet Explorer) that offer additional competitive advantages, such as ease of installation and being bundled with the dominant operating system.

Netscape, Which Once Controlled More Than 80 Percent of the Market