Preannouncement in the communication plan for hightech products

Salehoo Wholesale Sources

Wholesale Sources For eBay Sellers

Get Instant Access

Managing communication activities is truly an art [10]. In the computer industry, IBM and Microsoft are masters of timing [11]. Most specifically, they are very savvy about the preannouncement of their product before they are ready for market.

Preannouncement, sometimes disdainfully called "vaporware" [12], is a kind of communication that aims to influence the perception and attitudes of the different market players (i.e., the customers but also the competitors, distributors, suppliers, and even shareholders and governments). While most preannouncement focus on products and price reduction, they can also be related to future earnings, forthcoming alliances, changes in licensing strategies, moves in distribution strategies [13] or future acquisitions.

Preannouncement can help to fuel demand by creating some "buzz" in the market, as mobile telecommunication operators manage to do with photo messaging through camera handsets. This service was preannounced in 2001. It was introduced in Japan and Europe in mid-2002 with great success: photo-messaging Vodafone live! signed more than 2 million customers in United Kingdom alone within 1 year, while in Japan, DoCoMo sold more than 10 million camera phones in 11 months.

Preannouncement can also help customers to plan more efficiently for their purchasing and technological development. Routinely, all the major computer and telecommunication vendors are presenting their future products to their biggest customers under a nondisclosure agreement. Some companies also use preannouncement in order to attract new distributors or complementors like software developers, for instance as Microsoft did when it unveiled its X box game console to developers in March 2000 announcing that it would not ship for more than a year. In some cases, preannounce-ment is used just to motivate or keep those distributors with the company.

Ultimately in the high-tech industry, preannouncement is widely used mostly to maintain a high-profile leadership position [14]. Some innovative companies use preannouncement as a way to dissuade competitors from entering the market with similar products [15].

Others use it to counter the preannouncement or the launching of a new product, as a retaliatory preannouncing [16], in order to encourage their existing customers to delay purchasing. That was Microsoft's strategy when in 1994 IBM launched its new PC operating system Warp, which was directly aimed at the installed base of customers using Microsoft's MSDOS software: Bill Gates announced the launch of its new generation operating system Windows 95 for the beginning of 1995 and froze the market. The Warp market share plummeted in the following months and 2 years later, IBM halted any new development in PC operating software.

It has been shown that this aggressive communication strategy works well with no impact on the customers if the product ultimately delivers the feature and is available at the announced date. If this is not the case, a pre-announcement campaign can easily backfire and lead dissatisfied customers to move to another supplier, and can cost the firm its reputation and credibility [17]. One of the reasons why Webvan,, and scores of other dot-com companies crashed was because they failed to deliver on time and in quality the services they had hyped so much in advance.

Another downside of preannouncement is the immediate cannibaliza-tion of the current product line by the expected new product [18]. Customers may believe that the announced product is already available and will delay their purchasing decision to the date of actual availability. Finally, a preannouncement may give precious information to a competitor, which may try to catch up to or, even worse, to be the first to the marketplace with the product that was first preannounced by its competition. A famous example is the case of Storage Technology, which preannounced a new disk storage technology (StorageTek) in 1992 with a 1-year delivery time, but the product did not ship until mid-1994, because of various technical problems. Meanwhile, customers had turned to leader EMC and challenger IBM, which dropped its OEM deal with Storage Technology and launched its own storage product family named Shark. Ultimately, StorageTek lost $200 million.

Was this article helpful?

0 0
Salehoo Secrets and Tips

Salehoo Secrets and Tips

As with any web site, SaleHoo has a number of features that will help you in buying products from around the world. Once you have an account on SaleHoo, which only costs a one-time fee, you can establish up to twenty named searches for products. After that, any time those items become available, you’ll be alerted.

Get My Free Ebook

Post a comment