Prematurely announcing future products can cannibalize sales of current products.
Named for Osborne Computer, which announced its next machines in 1983 while still selling the current one. Whether the collapse was caused chiefly by the premature announcement is disputed: competition and other business problems also mattered, and Osborne himself disputed the account.
In practice
- A software vendor announces the next version's release date and watches this quarter's sales stop.
- A car dealer's forthcoming model announcement empties the forecourt of interest in the one on it.
- Possible explanations
- The explanation is anticipation: buyers who learn that a better version is coming defer purchase, and revenue falls before the new product can replace it.
- In its favour
- The mechanism is real and measurable in pre-announcement studies, and firms now manage announcements with it in mind.
- Against it
- Whether Osborne's own collapse was caused chiefly by the announcement is disputed, since the company also faced competition, delays and financial trouble, so the founding case may not illustrate the law named after it.
- Standing
- The mechanism is plausible; whether Osborne's collapse was caused chiefly by the announcement is disputed.
- Further reading
- Wikipedia
- Subject
- Economics & Incentives
- Essay
- The regularities money obeys