Information and communication technology (ICT) is advancing at a rapid pace and the lifecycle of ICT products has shrunk considerably. These products often come in a succession of generations with each new generation surpassing the previous ones in terms of technology dimensions. The Windows OS and iPhone series are good examples.

But to consumers, the frequent launch of new generations of a product presents a challenge: do they adopt the latest technology by leapfrogging older generations or by switching up from a recent version?

Xin Xu, Viswanath Venkatesh, Kar Yan Tam and Se-Joon Hong study such a situation in the context of the introduction of 3G services in Hong Kong where several older generations of mobile phone technologies (i.e. 2G, 2.5G) coexist and compete simultaneously. They contend that the factors governing adoption of 3G will vary depending on the technologies that existing customers are using, and they identify several important influences on consumer decisions which are of interest not only to academics but also telecom service providers.

"When a new platform generation is introduced, ICT service providers face a significant challenge in marketing service innovations and fostering success for both their organization and consumers," the authors say. More importantly, they also have to consider the large investment required in a new ICT platform and how to align this investment with revenues. This makes it essential for them to have a good understanding of what motivates consumers to migrate to new generations of products.

Starting from the assumption that consumers' current technology would influence their perceived value of the new technology and ultimately their decision whether to migrate to it, the authors surveyed more than 4,400 consumers about one month before 3G was introduced in Hong Kong. These consumers were using 2G (voice only), 2G (voice and data, mainly text messaging), and 2.5G (voice and a higher level of data such as Internet use). A second survey of about 2,300 consumers was conducted about six months after 3G started to see who had migrated to and was using 3G.

The authors were particularly interested in how consumers viewed the complementarities of 3G with their current technology, in terms of the interactions of the hardware platform, software platform, applications and services and also the variety of choices offered to consumers. For example, to enjoy the maximum utility from real-time experience sharing enabled by the 3G mobile network, consumers would need a mobile phone with a high-quality video camera (hardware) platform, an enhanced operating system supporting faster data transmission (software platform), a superior video capturing software (application) and the advance MMS (service) offered by mobile carriers.

"We expected consumers would migrate to a new ICT platform generation only if they saw significant synergistic gains across the different layers in the technology hierarchy," the authors say.

Also influencing a consumer's decision would be family and friends, the media, and the perceived image gain from adopting a new technology. It was found that media and peer influence affected a consumer differently depending on the technology he was currently using.

"Users of older generations are more likely to distrust information about the superiority of a new platform due to their experiences with the inferior functionality of its predecessors, and media campaigns will only serve to fortify these negative views. Consequently, any media advertising would have a negative effect. Thus caution is needed for decisions about marketing practices, especially advertising and other media forms," the authors say.

These factors, when combined in their surveys and models, were found to explain 60 per cent of the variance in migration as against only 28 per cent using model constructs drawn from previous research. Most importantly, the results supported the significance of complementarities in consumers' decisions.

"Our results show the majority of consumers do care about the radicalness of technological change resulting from platform migration. It is therefore important to strategically manage consumers' behavioral change triggered by service innovations. In particular, communication or design strategies such as education using analogy or metaphors could facilitate consumer's learning about the advantages offered by the new platform and lessen the burden of trial and error when using new ICT services. Furthermore, educating consumers about the various complementarities that appear to play a role in their decision making is crucial."

The authors suggest firms develop strategies that are sensitive to users of various types of older technologies so as to appeal to different attitudes to new technology. An effective strategy to manage the adoption of a new generation of technology in existence with older ones will certainly help to control the mix of revenues from different generations and to align the adoption rate with progress in infrastructure investment.