The Double-Edged Sword of Backward Compatibility: The Adoption of Multi-Generational Platforms in the Presence of Intergenerational Services Il-Horn Hann Byungwan Koh Marius F. Niculescu Robert H. Smith School of Business Haskayne School of Business Scheller College of Business University of Maryland University of Calgary Georgia Institute of Technology College Park, MD 20742 Calgary, AB T2N 1N4 Atlanta, GA 30308
[email protected] [email protected] [email protected] Information Systems Research, 2016, Vol 27(1), pp. 112-130 Permalink: http://dx.doi.org/10.1287/isre.2015.0615 Abstract We investigate the impact of the intergenerational nature of services, via backward compatibility, on the adoption of multi-generational platforms. We consider a mobile Internet platform that has evolved over several generations and for which users download complementary services from third party providers. These services are often intergenerational: newer platform generations are backward compatible with respect to services released under earlier generation platforms. In this paper, we propose a model to identify the main drivers of consumers’ choice of platform generation, accounting for (i) the migration from older to newer platform generations, (ii) the indirect network effect on platform adoption due to same-generation services, and (iii) the effect on platform adoption due to the consumption of intergenerational services via backward compatibility. Using data on mobile Internet platform adoption and services consumption for the time period of 2001 – 2007 from a major wireless carrier in an Asian country, we estimate the three effects noted above. We show that both the migration from older to newer platform generations and the indirect network effects are significant.