Battle for Dominance in the Word-Processing Software Market in Korea - How and Why Microsoft tipped the Market as an Entrant? Is it by Chance?

Competition for dominance in the software market is crucial. Conventional economic theories suggest that those who enter the market first will be able to capture the market. Indeed, the first-mover will benefit because consumers will purchase from the first-mover since there is no other available option. This will allow the first-mover to expand the market to reach the tipping point with little competition and therefore garner the benefits of network effects. However, we do find contradicting examples in the real-world. For example, in the browser war, Netscape entered the market before Microsoft, yet Microsoft now manages to dominate the browser market. Since, in the real-world, rivals could have entered the market prior to Microsoft, given that Microsoft is the entrant, how can it compete for dominance? This study adopts a game theoretic approach towards analyzing the word-processing software war in Korea from 1997 to 2003. From the analysis we find that there are several factors leading to the dominance of Microsoft. This study will be a good source of reference for practitioners contemplating to enter a market or those who are still defending their fortress.