Innovation and control in standards architectures: The rise and fall of Japan's PC-98

For more than a decade NEC dominated the Japanese PC market with its PC-98 architecture, which was incompatible both with its major Japanese rivals an d the global PC standard. However, NEC was powerless to prevent the introdu ction of Japanese versions of Windows 3.1 and 95 that ran on its competitor s' architectures as well as on the PC-98, unifying the Japanese PC market a nd creating a common set of application programming interfaces for all Inte l-based Japanese PCs. The introduction of Windows rendered obsolete the lar ge DOS-based software library that had provided strong positive externaliti es for the NEC architecture. Absent those advantages, the market share of t he PC-98 standard fell from 60% to 33% in five years, and NEC finally aband oned the PC-98 in favor of the global standard. An examination of the unusu al rise and fall of the PC-98 shows how victory in a standards competition can be negated by the introduction of a new architectural layer that spans two or more previously incompatible architectures.