Abstract
In markets with network externalities, the technology that gains a critical mass of users will gain market momentum, and further attract users. Despite this predicted self-reinforcing feedback propelled by “excess inertia”, which will make the technology with the larger installed user base win the whole market and lock out competing technologies, we observe “dethroners” in several contexts. Why are some technologies able to sustain momentum over time while others loose it in favor of dethroners? We address this question conceptually, by revisiting the concept of momentum into the inertial and dynamic components, and empirically, by estimating the effects of both components on technology adoption in a platform context. Drawing from Physics, we conceptualize the inertial component of momentum (i.e., mass) as the stock of platform complements, and the dynamic component (i.e., velocity) as the period-by-period change in such stock, or complement novelty. Testing our framework in the context of the U.S. video game industry, we find that both stock and novelty positively affect platform adoption by users, but novelty has a relatively stronger impact. This has relevant implications for technology adoption and competitive dynamics, which might help explain the market evolution and why latecomers may dethrone incumbents despite network disadvantage.