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Satellite Radio and Satellite Radio and Diffusion of Diffusion of Innovations: Innovations: How do you study the How do you study the early adopters of a new early adopters of a new technology? technology?

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Satellite Radio and Diffusion of Innovations:. How do you study the early adopters of a new technology?. Emergence of SDARS. World Space The original satellite radio idea was to develop an affordable way of transmitting information and radio to rural areas in Africa. - PowerPoint PPT Presentation

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Page 1: Satellite Radio and Diffusion of Innovations:

Satellite Radio and Satellite Radio and Diffusion of Diffusion of Innovations:Innovations:

How do you study the early How do you study the early adopters of a new adopters of a new technology?technology?

Page 2: Satellite Radio and Diffusion of Innovations:

Emergence of SDARSEmergence of SDARS World SpaceWorld Space

– The original satellite radio idea was The original satellite radio idea was to develop an affordable way of to develop an affordable way of transmitting information and radio transmitting information and radio to rural areas in Africa.to rural areas in Africa.

– Launched its first satellite in 1998.Launched its first satellite in 1998.

Page 3: Satellite Radio and Diffusion of Innovations:

Emergence of SDARSEmergence of SDARS Potential in the United States for Potential in the United States for

such a service in the 1990s?such a service in the 1990s?

– Disposable incomesDisposable incomes– ““Terrestrial” radio becoming Terrestrial” radio becoming

inundated by commercials inundated by commercials – Quality of AM/FM radioQuality of AM/FM radio

Page 4: Satellite Radio and Diffusion of Innovations:

Emergence of SDARSEmergence of SDARS American Mobile Radio (now XM American Mobile Radio (now XM

Satellite Radio) branches off from Satellite Radio) branches off from World Space.World Space.

CD Satellite Radio (now Sirius) CD Satellite Radio (now Sirius) also vies for the U.S. market.also vies for the U.S. market.

Page 5: Satellite Radio and Diffusion of Innovations:

Emergence of SDARSEmergence of SDARS Several companies submit bids to Several companies submit bids to

the FCC for two newly allocated the FCC for two newly allocated licenses.licenses.

– The companies that are now called XM The companies that are now called XM Satellite Radio and Sirius Satellite Radio Satellite Radio and Sirius Satellite Radio win the bids. win the bids.

– They paid over $80 million dollars each They paid over $80 million dollars each to participate in this government-to participate in this government-mandated duopoly.mandated duopoly.

Page 6: Satellite Radio and Diffusion of Innovations:

Benefits of SDARSBenefits of SDARS The convergence of digital The convergence of digital

satellite technologies with radio-satellite technologies with radio-based programming allows the based programming allows the consumer to access his or her consumer to access his or her favorite XM or Sirius channels favorite XM or Sirius channels from virtually anywhere inside the from virtually anywhere inside the United States. United States.

Page 7: Satellite Radio and Diffusion of Innovations:

Benefits of SDARSBenefits of SDARS Since 2001-2002, both satellite Since 2001-2002, both satellite

radio services offer approx. 100 radio services offer approx. 100 channels of music, talk, news, channels of music, talk, news, sports, and weather for a monthly sports, and weather for a monthly subscription fee of $12 - $13.subscription fee of $12 - $13.

Sirius runs no commercials; XM Sirius runs no commercials; XM runs commercials on several runs commercials on several channels.channels.

Page 8: Satellite Radio and Diffusion of Innovations:

Complications for Complications for SDARSSDARS The task that satellite radio The task that satellite radio

companies like XM and Sirius face companies like XM and Sirius face is to convince consumers that they is to convince consumers that they should pay for a service that is should pay for a service that is readily and freely available through readily and freely available through the FM/AM bands. the FM/AM bands.

Page 9: Satellite Radio and Diffusion of Innovations:

Complications for Complications for SDARSSDARS Consumers must buy a new Consumers must buy a new

receiver that gets either the XM receiver that gets either the XM or Sirius signal. (AM/FM is also or Sirius signal. (AM/FM is also available with these receivers)available with these receivers)

Currently, neither company has Currently, neither company has come out with a receiver that is come out with a receiver that is both XM and Sirius compatible. both XM and Sirius compatible. This is in the works right now.This is in the works right now.

Page 10: Satellite Radio and Diffusion of Innovations:

Competition for SDARSCompetition for SDARS It is reported that at least 200 It is reported that at least 200

million listeners per week still million listeners per week still tune into commercial radio.tune into commercial radio.

– Out of 100 million U.S. households, Out of 100 million U.S. households, satellite radio has only 4 percent of satellite radio has only 4 percent of the audience.the audience.

Page 11: Satellite Radio and Diffusion of Innovations:

Consumers of SDARSConsumers of SDARS In March of 2005, XM reported that they In March of 2005, XM reported that they

had more than 3.77 million subscribers, had more than 3.77 million subscribers, compared to Sirius who was reporting compared to Sirius who was reporting approximately 1.5 million.approximately 1.5 million.

With much of the nationwide audience With much of the nationwide audience virtually untapped, both companies are virtually untapped, both companies are currently competing for those potential currently competing for those potential subscribers. subscribers.

Page 12: Satellite Radio and Diffusion of Innovations:

The Adoption Rate of The Adoption Rate of SDARSSDARS Most consumers have not yet Most consumers have not yet

adopted the satellite radio adopted the satellite radio subscription service offered by subscription service offered by either of these two companies, either of these two companies, and reasons for this adoption rate and reasons for this adoption rate have yet to be examined in have yet to be examined in scholarly detail. scholarly detail.

Page 13: Satellite Radio and Diffusion of Innovations:

Diffusion of Diffusion of InnovationsInnovations Adopters of an innovation are classified on the Adopters of an innovation are classified on the

basis of innovativeness, “the degree to which an basis of innovativeness, “the degree to which an individual or other unit of adoption is relatively individual or other unit of adoption is relatively earlier in adopting new ideas than the other earlier in adopting new ideas than the other members of a system” members of a system”

The rate of adoption is influenced by the The rate of adoption is influenced by the characteristics of adopters related to characteristics of adopters related to innovativeness: socioeconomic status, personality innovativeness: socioeconomic status, personality values, and communication behavior. values, and communication behavior.

Most of the generalizations about characteristics Most of the generalizations about characteristics have been positively related to innovativeness, have been positively related to innovativeness, meaning “innovators score higher on these meaning “innovators score higher on these independent variables than do laggards”independent variables than do laggards”

Page 14: Satellite Radio and Diffusion of Innovations:

Diffusion of Diffusion of InnovationsInnovationsAccording to diffusion literature, thereAccording to diffusion literature, thereare five attributes of an innovation that are five attributes of an innovation that determine the adoption rate of an determine the adoption rate of an innovation. innovation. Relative advantageRelative advantage CompatibilityCompatibility ComplexityComplexity TrialabilityTrialability ObservabilityObservability

Page 15: Satellite Radio and Diffusion of Innovations:

Relative AdvantageRelative Advantage Relative advantage is the degree Relative advantage is the degree

in which an innovation is perceived in which an innovation is perceived as advantageous over an idea or as advantageous over an idea or technology that came before it. technology that came before it. – ability to be picked up by a subscriber ability to be picked up by a subscriber

almost anywhere in the United States almost anywhere in the United States – satellite radio services also offer satellite radio services also offer

commercial-free programming commercial-free programming

Page 16: Satellite Radio and Diffusion of Innovations:

CompatibilityCompatibility The degree to which an innovation The degree to which an innovation

is perceived as being concordant is perceived as being concordant with existing values, past with existing values, past experiences, and requirements of experiences, and requirements of potential adopters. potential adopters. – The satellite radio companies, from the The satellite radio companies, from the

beginning, have set out to make their beginning, have set out to make their product and service highly compatible product and service highly compatible with existing technologies such as with existing technologies such as personal computers and automobiles.personal computers and automobiles.

Page 17: Satellite Radio and Diffusion of Innovations:

ComplexityComplexity New ideas that are simpler to New ideas that are simpler to

understand are adopted more understand are adopted more rapidly than innovations that rapidly than innovations that require the adopter to develop require the adopter to develop new skills and understandings.new skills and understandings.

– satellite radio is similar in function satellite radio is similar in function and design to existing AM/FM radios and design to existing AM/FM radios

Page 18: Satellite Radio and Diffusion of Innovations:

TrialabilityTrialability The degree to which an innovation The degree to which an innovation

may be used on a limited basis.may be used on a limited basis.– Consumers who buy certain automobiles Consumers who buy certain automobiles

with the existing satellite radio technology with the existing satellite radio technology already installed have the option to use already installed have the option to use the product on a promotional basis. the product on a promotional basis.

– It’s reported that six out of ten XM Satellite It’s reported that six out of ten XM Satellite Radio promotional subscribers “convert to Radio promotional subscribers “convert to self-paying when the promotion ends” self-paying when the promotion ends”

Page 19: Satellite Radio and Diffusion of Innovations:

ObservablityObservablity The degree to which the results of The degree to which the results of

an innovation are visible to others.an innovation are visible to others.– Since both satellite radio services Since both satellite radio services

offer their products in certain stores offer their products in certain stores and automobiles, satellite radio is and automobiles, satellite radio is highly observable to the consumer. highly observable to the consumer.

– The service is also marketed on The service is also marketed on television, often with the automobile television, often with the automobile that it is offered in.that it is offered in.

Page 20: Satellite Radio and Diffusion of Innovations:

Who are the adopters?Who are the adopters? Application of the diffusion model to Application of the diffusion model to

satellite radio subscribership could satellite radio subscribership could provide some insight into the provide some insight into the diffusion of this new radio service. diffusion of this new radio service.

Because satellite radio is still in its Because satellite radio is still in its early stages, it is important to early stages, it is important to examine who the current adopters examine who the current adopters are and how they differ from future are and how they differ from future subscribers. subscribers.

Page 21: Satellite Radio and Diffusion of Innovations:

Problems with Problems with Diffusion StudiesDiffusion Studies How does one obtain a representative How does one obtain a representative

sample of satellite radio subscribers?sample of satellite radio subscribers?– Privacy of subscribersPrivacy of subscribers– Snowball sampling Snowball sampling – Internet research?Internet research?

Chat forums exist, and adopters would be Chat forums exist, and adopters would be attainable.attainable.

However, this study would not be However, this study would not be generalizable, it would be descriptive at best.generalizable, it would be descriptive at best.

Page 22: Satellite Radio and Diffusion of Innovations:

Problems with Problems with Diffusion StudiesDiffusion Studies Findings from various diffusion studies of Findings from various diffusion studies of

innovative technologies show mixed results innovative technologies show mixed results for certain factors, such as socioeconomic for certain factors, such as socioeconomic characteristics and communication behavior. characteristics and communication behavior.

However, reasons for these discrepancies However, reasons for these discrepancies may be a result of the targeted consumer may be a result of the targeted consumer audience of these innovations. audience of these innovations.

Certain technologies are directly marketed to Certain technologies are directly marketed to very particular segments of the consumer very particular segments of the consumer market. Research I have looked at has yet to market. Research I have looked at has yet to address this possibility, which may be address this possibility, which may be skewing results of various diffusion studies.skewing results of various diffusion studies.

Page 23: Satellite Radio and Diffusion of Innovations:

Problems with Problems with Diffusion StudiesDiffusion Studies The diffusion of innovation model The diffusion of innovation model

is largely linear.is largely linear.– Consumers are not a consideration Consumers are not a consideration

in the development of the in the development of the technology that may evolve over technology that may evolve over time.time.

– Social Construction of Technology Social Construction of Technology theory addresses this factor. (SCOT)theory addresses this factor. (SCOT)

Page 24: Satellite Radio and Diffusion of Innovations:

Suggestions for the Suggestions for the Current StudyCurrent Study What is the best way to study What is the best way to study

adopters of a technology such as adopters of a technology such as satellite radio?satellite radio?

Is the diffusion of innovations Is the diffusion of innovations theory relevant to today’s theory relevant to today’s adopter studies?adopter studies?