Evaluation of technological innovation in the cellular phone display

Abstract

The incredibly fast pace of technological development was up until recently the key growth factor in the mobile communications industry. Recently, however, as the market for the mobile communications equipment became saturated and competitive pressure intensified, the demand-side growth factor grew in importance. As a consequence, consumer preferences are likely to play the key role in determining the direction in which the mobile communications technology will develop. At present, multimedia services are the priority areas of the mobile communications technological progress. The multimedia services such as VOD (video on demand), video telephony services using streaming video technology as well as technological fusion with the other digital appliances like PDAs (personal digital assistant) and digital cameras, will attract more consumer's attention when the next generation of mobile communication services reaches the market. For example, color displays in cellular phones are one of the most important milestones in the path to the new paradigm of the multimedia technology. In this study, we analyzed consumer's valuation of color displays in cellular phones. At the time of the survey implementation, the market data was not available because it was a very early stage of adopting the color displays in cellular phones. Instead of adopting the revealed preference approach, a conjoint experiment was conducted where respondents were asked to rank cellular phone specification alternatives differing in the following attributes: the type of display, brand, and price. The ordered logic model applied to the survey data allowed us to decompose the cellular phones' values by the attributes, additional profit due to color display and the brand value, among others. Using our empirical estimates we also derived several implications for the competition strategy in the cellular phone market.