Professor Tim Derdenger

Tepper School of Business

Office Hours: W: 3-4pm
or by Appointment

Office: Posner 356

Email: derdenge@andrew.cmu.edu
Phone: 412.268.9812
http://www.andrew.cmu.edu/user/derdenge

45-872A: Technology Strategy

COURSE DESCRIPTION (45-872 Technology Strategy):
This course will focus on the strategies of technology-based products. We will examine how
technology products differ from non-technology-based products and how the unique attributes of
high-technology products influence the marketing strategies and tactics of those products. We
will cover issues such as the diffusion of high technology products and "crossing the chasm";
pricing of technology products including versioning and bundling; compatibility; standardization
within product markets; competition in technology-focused product arenas; continuous versus
discontinuous product changes and the product line. Examples of technology-intensive industries
are computer hardware and software, media and entertainment, telecommunications and ecommerce. Students explore the unique economic circumstances facing firms in these industries
and identify strategies that enable firms to succeed given these circumstances. This course is
ideal for students who want to pursue a career as a product/product line manager for a
technology company.
This course helps students understand the unique economic characteristics seen in todays
technology-intensive markets and how they impact the strategic interactions among firms and
consumers. Students study, for example: Why firms in technology markets give away their best
products for free. Why Apple taxes consumers for hardware but subsidizes music, movies, etc.
while Amazon subsidizes their hardware but tax software (music, books, movies, etc). Why Sony
won the Blu-Ray format war against HD-DVD which was sponsored by a whole array of
companies. In order for students to understand how firms strategically interact in technologyintensive industries this course will use a combination of simple but rigorous analytical models,
emerging theories, and formal case studies.
Learning Objectives:
The purpose of the course is to provide you with several general frameworks that you can then
use to analyze any high-technology industry.
It is not the express purpose of this class to update you on the latest developments in specific
technological areas, though efforts will be made to keep the examples as relevant as possible.
Frameworks, theories, and models provide you with tools you can continue to use as
technology develops and changes over your career.
The goal is not to understand how any one technology advances, but rather how technological
products evolve and impact firm strategies.

Disclaimer: The syllabus is tentative. The final version will depend on class size, availability of guest
speakers and scheduling. Please see course website for lecture notes and other material

1. Course Format

The course will employ a balanced mix of lectures, readings, and cases. The purpose of the
lectures is to present and discuss theories, concepts, analytical techniques and empirical findings.
The readings are intended to supplement the material covered in the lectures. The purpose of the
case discussions is to apply the concepts learned in the lectures to concrete real world situations,
where you put yourself in the position of a decision-maker, facing all the constraints and
considerations s/he faces. The cases have been selected primarily for the points they illustrate,
and also to give you as broad a cross-section of high tech industries and situations as possible.
Inevitably, some industries have been omitted, but the intent is that the learning from the course
applies across a broad range of situations.
2. Course Readings

The required readings and cases are contained on blackboard or via hyperlink below. There is no
physical course packet for this course.
3. Course Evaluation

(a) Final Project: in groups (40%),

(b) Cases: in groups (40%)
(c) Class participation (20%), which includes attendance and participation in discussions
Case Assignments
There will be 7 cases and 1 simulations discussed in this course, but only the cases will be
graded. The assignment questions for each case will be posted on blackboard a week before
your case report is due. You are required to answer 3 of the first 6 cases AND the final capstone
case (on the Wii gaming console). These 4 case assignments will constitute 20% of your grade.
An assignment will typically consist of 2 or so questions that involve analysis of the
information given in the case. For ALL cases your group is required to produce 5 slides
which give background information and setup of the case. At the start of each case I will
randomly select a group to present the overview of the case to the class. The following
guidelines will be used in grading the assignments:
You are required to give precise, to the point and short answers to the questions.
The answer to any single question should be kept within 1-1.5 pages (the specific details for each
assignment will be posted on Blackboard).
You are expected to support your statements with proper reasons and based on
information contained in the case. Any answer that makes blanket statements without
proper support or argument will be penalized.
We are more concerned with your reasons/arguments in support your answer, than
whether your answer is right or wrong. Keep in mind that your answer will be penalized
if strong (and obvious) counter-arguments or obstacles to your answer are evident but not

identified and discussed in your answer. On the other hand, weak counter-arguments can
be found against any answer, and you only need to be careful not to avoid or ignore
obvious/strong counter-arguments.
You will be given comments on your answer sheet wherever you have been penalized. If
any student is not satisfied with his/her grade, he/she can give it back to the instructor for
re-grading (along with the note as to why you think your grade is not appropriate). The
instructor will re-grade the assignment, but note that it may result in no grade change, a
higher or even a lower grade.
Late work will not be accepted and the instructor/TAs will not accept work by fax, email. Further, you may not discuss the assignments with anyone but your group
partners. University policy forbids plagiarism or any other academic offenses.

Class Participation
This is a discussion-based course, so class participation will be absolutely critical if you are to
benefit fully. Participation is all about building a learning community and it will be your
contribution to this community that counts. The instructors role during a case discussion is that
of a facilitator and moderator. In the classes, we are less concerned with right or wrong
answers than we are with thoughtful contributions which follow the discussion and either add to
the debate or move it in a new direction. Furthermore, we dont want to have a situation where
everyone is competing for airtime: this works against building a learning community. So I
propose to grade participation according to the following expectations:
Participation points are mainly given for those classes in which we have case discussions
and not for those classes in which we have lectures. Specifically, there are no
participation points for asking clarification questions during the lectures.
Everyone will be expected to show up and to be prepared for class. If you must miss a
class, please inform me before the class why you will be missing the class. Students who
repeatedly arrive late to lectures/case discussions or who miss lectures/case discussions
without the professors prior permission will have their class participation grade lowered.
Every student is expected to display his/her name card during class.
Warm Calling: Each case discussion will be introduced by 1-2 students, who will be
asked in advance to introduce the case. Students introducing the cases will have three
minutes to: state the problem, and identify the major issues and strategic options given in
the case. These student introductions will help to set the agenda for the discussion by

identifying the central problem in the case, and the most significant situationally relevant
facts.
Cold Calling: Although everyone will be encouraged to participate, students may be
called on randomly during the class discussion.
You should generally speak up in class. Try to have something valuable to say in at least
3 sessions. You should be aware that good participation means quality of participation, as
opposed to quantity. The following questions will be considered in grading participation:
o Do comments interpret or integrate case facts using theories, concepts, and
analytical tools presented in the readings and lectures?
o Can the participant provide insights on why certain market phenomena (that are
being discussed in class) are observed? Further can he/she add to the concepts
being discussed in class with suitable examples?
o Can the participant show the ability to challenge the concepts being discussed in
class by giving counter examples/reasons?
o Is the participant an effective communicator? Are comments presented in a
concise and convincing manner?
o Does the participant listen to other comments? Is the participant able to build on
and evaluate other comments? Does the participant learn from and show respect
for other speakers and their points of view?
o Most importantly, participation points are not given for the right answers.
Instead, participation points are given if a student comes up with any insight, right
or wrong, as long as he/she can support it with reasons/examples. In a similar
vein, any comment, although correct, if not backed up by reasons will not be
awarded any participation points.

Final Project:
An in-depth class project will be an integral learning component of this course. The project topic
is your choice, and should involve application and analysis of the concepts learned in this class
to a real-world product.
Summary: form your team, choose your topic, get it approved, and present final
report.
Types of topics: very flexible - anything that exercises the topics and concepts studied
in this course. But you are required to select a high tech product which has failed
or is on the precipice of failing. You are encouraged to email me for feedback on
candidate topics.
Last week of class. Project presentation to class (but you can imagine the audience is
your corporate executives or board etc.).
Due on the scheduled final exam day Written report is an executive summary
(approximately 5-7 pages) supported by additional materials from your presentation.

Qualitative Analysis of Competitive Strategy

Write an essay analyzing the firms strategy for a product or product line which failed or is
about to fail.
1. State the background facts, describe what competitive factors are at play (e.g., strong network
effects), the key milestones in competitive strategies and actions chosen by the firm (e.g.,
compatibility choices).
2. Analyze whether these actions were smart or not, did they suitably take into account the
competitive factors listed above, what were the outcomes, and to what extent are they consistent
with theory (and therefore could have been reasonably predicted).
3. Conclude with some lessons learned and suggestions/directions for management decisions in
other industries. If the product failed, how could their strategy change in order to make it
successful? If the product was able to recover, how did the strategy change in order for the
product to be successful?
Required Book
[R] Carl Shapiro and Hal R. Varian, Information Rules (IR), Harvard Business School Press, 1999
Require Reading (on blackboard):
1. Anirudh Dhebar, Economics of Product Variety, HBS, 1993
2. David B. Yoffie and Mary Kwak , With Friends Like These: The Art of Managing
Complementors, HBS, 2007
3. Thomas Eisenmann, Winner-Take-All in Networked Markets, HBS, 2007
4. Thomas R. Eisenmann; Geoffrey Parker; Marshall W. Van Alstyne, Strategies for TwoSided Markets, HBS, 2007
5. Thomas Eisenmann, Platform-mediated networks: Definitions and core concepts, HBS,
2007
6. Jakki Mohr, S. Sengupta, S. Slater, Marketing of High-Technology Products and
Innovations, CH 7, Prentice Hall, 2010

1.
2.
3.
4.
5.
6.
7.

Cases and Simulations:

Microsoft: Positioning the Tablet PC HBS, 2003
Cambridge Software Corp., HBS, 1993
Wintel A HBS, 2003
The Rise and Fall(?) of Palm Computing in Handheld Operating Systems, HBS, 2003
Research in Motion: The Mobile OS Platform War HBS, 2013
Uber: 21st Century Technology Confronts 20th Century Regulation HBS, 2012
Wii Encore?, HBS, 2011

Schedule

Session
1.1

Topics
Course Introduction,
Innovation

Case Discussion

Deliverables
Form
Student
Teams

Comments/Readings
Review Syllabus,
Lecture Notes,
[R] ch1

2.1

Microsoft Tablet

Case Write-Up

Lecture notes,
[6]
Lecture notes
[R] ch2-3,[1]

3.1

High Tech Consumers and

Positioning; Case
Pricing in Technology
Markets
PTM Cont

Case Write-Up

3.2

Managing Complements

Cambridge
Software
Wintel

Case Write-Up

Lecture notes
[2], [R] ch8

4.1

Wintel: Simulation

4.2

Network Effects

Rise and Fall of

Palm

Case Write-Up

Lecture notes
[3]

5.1

Network Effects, Switching

Cost/Lock-In; Group
meeting with Professor

Final Project
Topic

[R] ch5-7

5.2

Two-Sided Markets, Platform

Governance
Govt Regulation in Tech
Net Neutrality

RIM Mobile
OS Platform
Uber

Case Write-Up

[4],[5]

Case Write-Up

Lecture notes
[R] ch10

6.2

Course Wrap-up

Wii-Encore

Case Write-Up

7.1
7.2

Student Presentations
Student Presentations

2.2

6.1