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Osborne Effect

Contributor(s): Matthew Haughn

The Osborne Effect is a reduction in sales of current products after the announcement of a future product. The name of the effect comes from a computer company called Osborne Computer Corporation. After taking over a year from product announcement of new computer models to launch, Osborne Executive and Osborne Vixen, eventually Osborne Computer Corporation ended in bankruptcy.

The Osborne Effect is often driven by the fear of missing out (FOMO). For example, when the North Star Computer announced double capacity floppy drives, the company inadvertently made their current models obsolete. The reduced sales produced a slump and the company never recovered. 

The Osborne Effect often hinges on timing but also situational judgement. Often, it is the result of customers desiring an announced product more than current offerings. Consumers may see the announced product’s features as more desirable. In some cases there may be shortcomings in a current product that are addressed in a new model. In the case of the Osborne 1 Computer, for example, the larger screen of both their new model and the competition's even larger CRT screen made the Osborne 1 Computer an essentially unsellable product.

 

This was last updated in May 2019

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