Truth or Consequences: An Analysis of Vaporware and New Product Announcements

Journal of Marketing Research

Posted: 20 Dec 2000

See all articles by Barry L. Bayus

Barry L. Bayus

University of North Carolina Kenan-Flagler Business School

Sanjay Jain

University of Texas at Dallas

Ambar G. Rao

Washington University in St. Louis - John M. Olin Business School

Multiple version iconThere are 2 versions of this paper

Abstract

The possible predatory and anti-competitive implications of announcing new products well in advance of actual market availability has lead to allegations that firms are intentionally engaging in vaporware. This issue recently surfaced in the antitrust case United States v. Microsoft Corporation. In this paper, we consider the possibility that intentional vaporware is a way to discourage competitors from developing their own competing new products. An empirical examination of data for the packaged software industry confirms that some firms may use vaporware in a strategic manner. We formulate and analyze a game theoretic model for the preannouncement and introduction timing decisions of two firms. We find that vaporware can be a way for a dominant firm to signal its product development costs, and that intentional vaporware can deter entry. We show that there is a curvilinear relationship between product development costs and announcement accuracy, i.e., firm with high or very low costs make accurate announcements while firms with intermediate costs desire to intentionally engage in vaporware. Empirical support for these results is also found in the software data. We discuss the beneficial and harmful consequences of vaporware, as well as the associated implications.

Note: This is a description of the article and not the actual abstract.

Keywords: Antitrust; Software; Vaporware; Signalling Model; Game Theory

JEL Classification: L4, K0, C7, M3

Suggested Citation

Bayus, Barry and Jain, Sanjay and Rao, Ambar G., Truth or Consequences: An Analysis of Vaporware and New Product Announcements. Journal of Marketing Research. Available at SSRN: https://ssrn.com/abstract=254259

Barry Bayus (Contact Author)

University of North Carolina Kenan-Flagler Business School ( email )

McColl Building
Chapel Hill, NC 27599
United States
919-962-3210 (Phone)

Sanjay Jain

University of Texas at Dallas ( email )

Jindal School of Management
University of Texas at Dallas
Richardson, TX 75080
United States

HOME PAGE: http://utdallas.edu/~sxj164830/

Ambar G. Rao

Washington University in St. Louis - John M. Olin Business School ( email )

One Brookings Drive
Campus Box 1133
St. Louis, MO 63130-4899
United States
314-935-4515 (Phone)
314-935-6359 (Fax)

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