[PaulKeeble]

The first mover advantage is huge. Once users have already chosen to use your software it will take something substantially better over an extended period of time for most to move over to a competitor that has solved it better. The risk of that happening when you are already making money and solving the problem and have most of the market is small. If you keep irritating your customers and they have a better alternative then you will slowly loose share of the market.

The cultures that tend to ship buggy software also tend to be the sort of cultures where the quality doesn't improve in response to a competitor however. But so far almost every software business has ultimately failed so being on top for a decade because you shipped some of the solution earlier works better. Customers are more than happy to buy exceptionally buggy software and games.

[Retric]

The first mover advantage is an illusion. Google didn’t invent search or online Email. Microsoft didn’t pioneer personal computing, spreadsheets, or word processing. Facebook wasn’t the first social network. Apple made most of it’s money from markets it entered late iPod, iPhone, and then iPad where the Newton failed. Intel wasn’t the first to build a microprocessor. IBM didn’t invent the computer.

[dagw]

The first mover advantage is an illusion.

I wouldn't go that far. All the cases you cite are of products that definitely classify as substantially better than what they replaced.

Before Gmail took over the market from Hotmail there had been several other companies that failed due to only being slightly better.

Yes you can beat the "first mover", but doing so is hard and requires an almost revolutionizing better product.

[Retric]

I am not saying it’s easy to beat them, rather first movers also generally die or move on. Atari, Electronic Controls Company, Mosaic, etc simply aren’t around any more. Sure Yahoo isn’t dead, but it’s also moved on from it’s initial success.

[dagw]

first movers also generally die or move on.

Sure, but before that they generally make a lot more money than the second and third mover. When all is said and done, Atari and Yahoo did much better than Colecovision and Lycos.

The risk with being the first mover is that, having easily seen off competition from the second and third mover, you become complacent and stop moving.

[Retric]

Many arguably most first movers simply flopped, look at social networks or MMO’s for example. The bias of only remembering successful first movers is exactly the illusion I am talking about. Generally if a slightly different business model works it’s a first mover if it fails it’s a bad idea.

[iso1631]

Google search was two orders of magnitude better. Gmail launched with 1G storage when hotmail offered 10M. Both products launched with exponentially growing customer base too.

Despite that, hotmail still exists.

While first mover doesn't guarantee success, it's certainly an illusion.

[Retric]

Two orders of magnitude is a serious exaggeration. I remember swapping back and forth through multiple search engines well after Google showed up. Search index size and update frequency used to be a much larger issue for me.

Early on I swapped from yahoo mail to gmail to hotmail because gmails spam filtering wasn’t good enough. Among my fiends Gmail really won on UI not space.