Editing Osborne effect (section)

==Description==
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[[File:Portable1982.jpg|thumb|An Osborne 1 from 1982]]
[[File:Osbourne Executive (34 365).jpg|thumb|An Osborne Executive]]
[[File:Osborne 'Vixen" Prototype.jpg|thumb|An Osborne Vixen prototype]]
The Osborne effect occurs when premature discussion of future, unavailable products damages sales of existing products. The name comes from the planned replacement of the [[Osborne 1]], an early personal computer first sold by the [[Osborne Computer Corporation]] in 1981. In 1983, founder [[Adam Osborne]] pre-announced several next-generation computer models (the [[Osborne Executive]] and [[Osborne Vixen]]), which were only prototypes, highlighting the fact that they would outperform the existing model as the prototypes dramatically cut down assembly time.<ref>{{Cite web|url=https://productsthatcount.com/resources/podcast/studiored-founder-developing-digital-physical-interactions/|title = StudioRed Founder on Product Design|date = 21 May 2018}}</ref> A widely held belief was that sales of the Osborne 1 fell sharply as customers anticipated those more advanced systems, leading to a sales decline from which Osborne Computer was unable to recover. This belief appeared in the media almost immediately after the company's September 1983 bankruptcy:{{r|ahl198403}}

{{blockquote|To give the jazzy $2,495 Osborne Executive a running start, Adam began orchestrating publicity early in 1983. We, along with many other magazines, were shown the machine in locked hotel rooms. We were required not to have anything in print about it until the planned release date in mid-April. As far as we know, nothing did appear in print, but dealers heard about the plans and cancelled orders for the Osborne 1 in droves.

In early April, Osborne told dealers he would be showing them the machine on a one-week tour the week of 17 April, and emphasized that the new machine was not a competitor for the Osborne 1. But dealers didn't react the way Osborne expected; said Osborne, "All of them just cancelled their orders for the Osborne 1."}}

Osborne reacted by drastically cutting prices on the Osborne 1 in an effort to stimulate cash flow. But nothing seemed to work, and for several months sales were practically non-existent.<ref name="ahl198403">{{cite news | url=http://www.atarimagazines.com/creative/v10n3/24_Osborne_Comptuer_Corporat.php | title=Osborne Computer Corporation | access-date=4 April 2011 | author=Ahl, David H. | date=March 1984 | work=Creative Computing | publisher=Ziff-Davis | pages=24}}</ref>

Pre-announcement is done for several reasons: to reassure current customers that there is improvement or lower cost coming, to increase the interest of the media and investors in the company's future prospects, and to intimidate or confuse competitors. When done correctly, the sales or cash flow impact to the company is minimal, with the revenue drop for the current product being offset by orders or completed sales of the new product as it becomes available. However, when the Osborne effect occurs, the quantity of unsold goods increases and the company must react by discounting and/or lowering production of the current product, both of which depress cash flow.