The Adoption of Multi-Generational Platforms in the Presence of Intergenerational Services

32 Pages Posted: 7 Nov 2012 Last revised: 27 Oct 2015

See all articles by Il-Horn Hann

Il-Horn Hann

University of Maryland - Decision and Information Technologies Department

Byungwan Koh

Korea University

Marius Florin Niculescu

Georgia Institute of Technology - Scheller College of Business

Date Written: July 12, 2013

Abstract

We investigate the impact of intergenerational services on the adoption of multi-generational platforms. We consider mobile Internet platform generations for which users download complementary services from third party providers. These services are often intergenerational: newer platforms are backward compatible with respect to services released under older platform generations. In this paper, we develop a model to identify the main drivers of adoption of subsequent generations of mobile Internet platforms, including (i) the migration from older to newer platform generations, (ii) the indirect network effect between platform users and services, and (iii) the effect of intergenerational services on platform adoption. Using data on mobile Internet platform adoption and services consumption from a major wireless carrier in an Asian country for the time period of 2001-2007, we estimate the three effects noted above. We show that both the migration from older to newer platform generations and the indirect network effect are significant. The surprising finding is that intergenerational services that connect subsequent generations of platforms essentially engender backward compatibility with two opposing effects. While an intergenerational service may accelerate the migration to the subsequent platform generations, it may also, perhaps unintentionally, provide a fresh lease on life for older generation platforms due to the continued use of older generation services on newer platform generations. This 'shot in the arm' effect for older generation platforms is due to the users who adopt an older generation platform instead of adopting a newer one.

Keywords: Platforms, multi-generation diffusion, backward compatibility of services, lease on life, network economics

JEL Classification: L86, L96, O33

Suggested Citation

Hann, Il-Horn and Koh, Byungwan and Niculescu, Marius Florin, The Adoption of Multi-Generational Platforms in the Presence of Intergenerational Services (July 12, 2013). NET Institute Working Paper No. 12-17, revised July 2013, Available at SSRN: https://ssrn.com/abstract=2164390 or http://dx.doi.org/10.2139/ssrn.2164390

Il-Horn Hann (Contact Author)

University of Maryland - Decision and Information Technologies Department ( email )

Robert H. Smith School of Business
4313 Van Munching Hall
College Park, MD 20815
United States

Byungwan Koh

Korea University ( email )

Anam-Dong, Seongbuk-Gu
Seoul 136-701, 136701
Korea

Marius Florin Niculescu

Georgia Institute of Technology - Scheller College of Business ( email )

800 West Peachtree St.
Atlanta, GA 30308
United States
404-385-3105 (Phone)

HOME PAGE: http://scheller.gatech.edu/directory/faculty/niculescu/index.html

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