Blazing Saddles: the early and mainstream markets in the High-Tech product life cycle

Jacob Goldenberg, Barak Libai, Eitan Muller and Renana Peres
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Jacob Goldenberg: Hebrew University, Jerusalem
Barak Libai: Tel Aviv University
Eitan Muller: Tel Aviv University
Renana Peres: Tel Aviv University

Israel Economic Review, 2006, vol. 4, issue 2, 85-108

Abstract: In this article, we showed the results of our study on the saddle phenomenon by an analytical model of two markets? early and mainstream? and the relationships between them. This model creates a growth pattern wherein a saddle can be discerned. We tested this model empirically on seven product categories, and in only one (cell phones) was a clear saddle not observed whose length was at least one year. Moreover, of the six remaining products, the partial communication break model of the dual market succeeded in explaining clearly the dropoff in sales in four categories: PCs, VCRs, video games, and cordless phones. Of the two remaining categories (CD players and answering machines), a dual market was observed, yet the model did not yield a dropoff in sales, but rather a clear delay in the adoption process.

Date: 2006
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