In this paper we introduce a model that is suitable to study the diffusion of new and dominant multi-generation technologies. Examples are computer operat- ing systems, mobile phone standards, video game consoles. Our model incorporates three new features that are not included in related models. First, we add the ability of a firm to transfer users of its old technologies to the new generations, what we call firms’ alpha. Second, we add competitive relations between market technolo- gies. Third, the launch strategies diagnosed by our model cover, as special cases, the now or never strategies and hence it is suitable to study intermediate launch strategies. We find that the appropriate timing of a new technology depends heavily on both the firms’ alphas and on the competitive positioning of their products. In addition, we argue that the strategic interaction of firms may lead to very different sales outcomes depending on the competitive positioning of their products. In the VGC case we find that the Nintendo Wii was launched at an appropriate moment while the Sony PS3 perhaps should have never been launched.

Additional Metadata
Keywords launch timing, multi-generation diffusion models, video-game industry
JEL Statistical Decision Theory; Operations Research (jel C44), Business Administration and Business Economics; Marketing; Accounting (jel M), Marketing (jel M31)
Publisher Erasmus Research Institute of Management
Persistent URL hdl.handle.net/1765/19670
Series ERIM Report Series Research in Management
Journal ERIM report series research in management Erasmus Research Institute of Management
Citation
Hernández-Mireles, C, & Franses, Ph.H.B.F. (2010). The Launch Timing of New and Dominant Multigeneration Technologies (No. ERS-2010-022-MKT). ERIM report series research in management Erasmus Research Institute of Management. Erasmus Research Institute of Management. Retrieved from http://hdl.handle.net/1765/19670