Apr 18, 1983 — Announcement of the Osborne Executive and the Beginning of the Osborne Effect
April 18, 1983
The Osborne effect is a term used in marketing, economics, and the IT industry to describe a drop in sales caused by announcing a new version of a product too early.
What happened?
Osborne Computer Corporation released the portable computer Osborne 1 in 1981. Thanks to its low price for the time (under $2,000), a large software bundle, and wide availability, the machine quickly became popular. Sales exceeded expectations several times over.
Riding this success, company management decided to show their upcoming models — the Osborne Executive and the Osborne Vixen — to wholesalers and industry journalists on April 18, 1983. Both machines were significantly more advanced than the already popular Osborne 1, but they were still far from mass production and large-scale shipments. The company organized the presentation to demonstrate to the industry and potential investors that development was moving forward and that Osborne was not planning to stop with its first successful product.
Something unexpected happened. Despite the private nature of the presentation, information about the newer and more powerful machines quickly spread across the industry among users and enthusiasts. Dealers immediately slowed or stopped wholesale purchases of the Osborne 1, worried that they would not sell their inventory once the improved models arrived. Many customers also delayed buying a computer, expecting to purchase the newer machines soon.
Sales of the Osborne 1 collapsed to critical levels. The company attempted to cut prices several times, but it did not help.
Osborne Computer Corporation filed for bankruptcy in September 1983 — only five months after the presentation.
Impact on the industry
The Osborne case became a lesson for the technology industry. After this incident, technology companies became far more careful about revealing details of upcoming products. Keeping future releases secret helps them control marketing signals and avoid harming sales of products that are already on the market.
That is one reason companies today don’t reveal details about future smartphones or computers before launch. Instead, the information space fills with leaks and speculation about “what the next iPhone might be.”
Studying the history of computing is useful because it helps avoid repeating the mistakes of earlier generations.