Too Little, Too Early: Introduction Timing and New Product Performance in the Personal Digital Assistant Industry

The authors address the following key questions: (1) When should a firm introduce a new product? (2) What should its performance level be? and (3) How do the decisions of a competing firm affect a firm's timing and product performance decisions? The authors present a detailed case study of the...

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Bibliographic Details
Published in:Journal of marketing research 1997-02, Vol.34 (1), p.50-63
Main Authors: Bayus, Barry L., Jain, Sanjay, Rao, Ambar G.
Format: Article
Language:English
Subjects:
Capital costs
Case studies
Chief executive officers
Comparative analysis
Competition
Competitive advantage
Computer industry
Computer software
Computers
Consuls
Duopoly
Industrial market
Industrial products
Marketing
Mathematical models
PDAs
Personal computers
Personal digital assistants
Product development
Product introduction
Product performance
Studies
Time to market
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Summary:The authors address the following key questions: (1) When should a firm introduce a new product? (2) What should its performance level be? and (3) How do the decisions of a competing firm affect a firm's timing and product performance decisions? The authors present a detailed case study of the initial competitors in the personal digital assistant (PDA) industry on the basis of which they construct a stylized game-theoretic model of entry timing and product performance level decisions in a duopoly. Situations in which the duopolists are symmetric as well as asymmetric in terms of their estimates of market size and product development capabilities are considered. When firms are symmetric, the authors show that an equilibrium exists when the firms enter at different times with different performance levels. In the asymmetric cases, the firm that has a higher estimate of market size enters first, as does the firm with a superior development process. The performance level decisions, however, depend on the sensitivity of demand to this variable. The results provide one explanation for empirical observations that market pioneers maintain their leadership in some cases, and later entrants eventually dominate in other cases. The authors then relate the model results to actual decisions in the PDA market, finding that Apple's Newton was "too little, too early."
ISSN:0022-2437
1547-7193
DOI:10.1177/002224379703400105