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The impact of superstar and non-superstar software on hardware sales: the moderating role of hardware lifecycle

  • Richard T. Gretz
  • Ashwin Malshe
  • Carlos BauerEmail author
  • Suman Basuroy
Original Empirical Research

Abstract

In the context of two-sided markets, we propose hardware lifecycle as a key moderator of the impact of superstar and non-superstar software on hardware adoption. A hardware’s earlier adopters are less price sensitive and have a higher preference for exciting and challenging software. In contrast, later adopters are more price sensitive and prefer simplicity in software. Superstar software tend to be more expensive and more complex compared to non-superstars. Therefore, earlier (later) adopters prefer superstars (non-superstars), which leads to higher impact of superstars (non-superstars) on hardware adoption in the early (later) stages of the hardware lifecycle. Using monthly data over a 12-year timeframe (1995–2007) from the home video game industry, we find that both superstar and non-superstar software impact hardware demand, but they matter at different points in the hardware lifecycle. Superstars are most influential when hardware is new, and this influence declines as hardware ages. In contrast, non-superstar software has a positive impact on hardware demand later in the hardware lifecycle, and this impact increases with hardware age. Findings reveal that eventually the amount of available non-superstar software impacts hardware adoption more than the amount of available superstar software. We provide several managerial implications based on these findings.

Keywords

Indirect network effect Superstars Two-sided markets Lifecycle theory Relationship marketing 

Notes

Acknowledgements

This research benefited from generous support provided by the Carolan Research Institute and a Bradley University Foster College of Business Administration Faculty Development Grant. The authors would like to thank participants at the 2017 American Marketing Association Winter Educators’ Conference and the 2015 American Marketing Association Winter Educators’ Conference. Additionally, the authors thank BJ Allen for helpful comments on an earlier draft and four anonymous referees, an associate editor, and the editor for insightful comments throughout the review process. Lastly, the authors thank Katlyn Brinkley and Aaron Gleiberman for their copyediting prowess. The usual disclaimer applies.

Supplementary material

11747_2019_631_MOESM1_ESM.docx (715 kb)
ESM 1 (DOCX 716 kb)

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Copyright information

© Academy of Marketing Science 2019

Authors and Affiliations

  1. 1.Department of Marketing, College of BusinessThe University of Texas at San Antonio One UTSA CircleSan AntonioUSA
  2. 2.The Culverhouse College of BusinessThe University of AlabamaTuscaloosaUSA

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