A Case Study of Diffusion of Innovation under Competition

In this work, the aim is to discuss the relative importance of the driving parameters of the diffusion of innovation under competition. As a case study the competitive existence of Android and iOS operating systems are modeled in the context of an extended Bass model. The chosen model consists of two coupled differential equations. Each differential equation has the same form of the well known Bass equation with an extra term which represents the effect of the existence of the competitor. Since the smartphone sales and usage are globally well documented, publicly available global smartphone market share and sales data are used to determine the model parameter values. The smartphone global market share data spans 28 quarters starting from the first quarter of 2009. The distribution of the market share in the first quarter has been used as the initial values of the competing operating systems. A minimization process obtains the free parameters (six in total) of the differential equations. The values of the parameters are fixed by minimizing the difference between the solution of Bass equation and the smartphone global market share data. The parameter values of iOS and Android operating systems indicate that, on the worldwide scale, the adaptation of new ideas/products the dominantly led by the personal interactions. In fact, through social networks, information flow is immense, and individuals rely on the information obtained directly from a trusted individual. Publicity parameter values indicate that very rarely decision of an individual is formed by only the mass media or publicity. On the contrary, to the publicity parameter, it is observed that the existence of a competitor has a considerable effect on the sales of both parties.