Sacrificing uniformity: the journey of Bluetooth

A unique aspect of standards is that they define uniformity concerning, e.g., the interconnection between system components. By adhering to these standards, companies know their products can connect to other products when integrated into systems. Therefore, a standard should not be changed, as, consequently, interoperability cannot be guaranteed. At the same time, from the literature on innovation management, we know that companies that make their designs flexible will be able to include user requirements. As a result, these users will be more inclined to choose these designs, increasing the installed base and design dominance. This paper addresses the counterintuitive relationship between standardization and flexibility. Specifically, we study whether standards flexibility will result in more successful standards regarding their installed base. We study the standards battle for short-range wireless communication between IrDA and Bluetooth in the home. The standardization process surrounding the winning standard, Bluetooth, was more flexible. This provides a first indication that flexibility in standardization positively affects standards dominance.