by Joanna Stavins
November/December 1995

The personal computer market underwent significant structural changes throughout the late 1970s and 1980s. While some manufacturers of personal computers managed to remain in the market for a number of years, many others left after a short time. Besides the more visible movement of firms in and out of the industry, each firm also made underlying decisions regarding which models to offer.

This article analyzes model selection strategies adopted by personal computer (PC) companies from 1976 to 1988, focusing on differences between established and new firms. While new firms were more likely to produce models with similar characteristics, established firms offered a larger variety of models. With such model “dispersion” strategies, they avoided replacing their existing models and occupied new, top-of-the-line market segments before entrants. High-priced models, controlling for their technical attributes and brand effects, were more likely to leave the market. Brand effects were also significant in affecting PC models’ probability of exit. Models produced by firms with more experience, both in years and in the number of models produced in the past, were more likely to survive longer.

Full-text article