The Ubiquitous Model for Dynamic Diffusion of Information Technology

The recent information technology products with capability of performing multiple functions owing to the digital convergence, e.g., smart phones with fast Internet connection, provide ubiquitous access to the Internet for consumers. To model diffusion processes of such products and services requires a comprehensive modeling framework. We address major issues in the framework which include the consumer heterogeneity of diffusion modeling and market segmentation determined by the adoption process, the need for more generalized model than the successive generation substation theory, the distinction of the adoption processes based on the sequence of adopting different technologies, and the network externalities. The comprehensive diffusion model based on the Bass Model was proposed, and the hierarchical Bayesian model was formulated for estimation. We conjecture that a segment could be defined by the process of how consumers adopt the IT service, and we develop the diffusion models for each of the segments. The proposed model thus consists of those segment specific models, and is capable of identifying the market potential for each segment. The empirical analysis using data on Internet subscriptions via PC and digital cellular phone in the U.S. and Japan shows that the proposed model can capture the interactive effect between two diffusion processes, and provides an excellent fit to the data. The hypotheses developed in the theoretical framework are supported, and we discuss theoretical contributions and managerial implications.