A late entry into hydraulic excavators, and Komatsu-Bucyrus (1968)

Distribution over product — how a latecomer overturns the first mover

At the centre of this decision is that a latecomer unable to lead on technology turned the breadth of the sales reach it had built in an existing business into a competitive edge. The hydraulic excavator itself was a latecomer’s product — Komatsu had stumbled on in-house development and brought it to market by borrowing the technology of a world-class maker. That it nonetheless took the top spot in Japan was because it had already secured customers and locations through bulldozers; what decided the outcome was less the merits of the product than the breadth of the route reaching the buyer.

The same question still faces any company entering a new market late. Not only whether it can prepare a superior product, but how much of a route to deliver it — and a relationship with customers — it already holds: Komatsu’s hydraulic excavator shows that these two can decide the outcome of the fight. That said, the existing sales network worked as it did because the buyers for bulldozers and hydraulic excavators overlapped; how far a route can be repurposed depends on the distance between the old customers and the new business.