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Osborne effect? What Osborne effect?

Marc Perton
06.21.05
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Osborne 1 computerBy now, you've surely heard about the "Osborne Effect," which occurs when a computer manufacturer pre-announces a product long before it's introduced, and goes bust as customers stop buying current models in anticipation of the new ones. The term is based on Osborne Computing, which went under in the early 1980s, and has been used repeatedly in recent weeks by pundits discussing the possibility that Apple could share Osborne's fate as potential customers delay purchases until Intel-based Macs hit store shelves. Problem is, there is no Osborne effect. As Osborne expert Charles Eicher points out in The Register, "they had transitioned to a new model, and it was finally shipping. Sales were going well, and money was flowing back into the company after months of postponed sales." Then, a senior exec discovered that the company had a pile of motherboards from the earlier model (worth about $150K), and figured it would make good sense to build those into full-fledged computers, which ended up costing the company $2 million. Osborne went under, and is now a textbook case in how not to run a business — though, as it turns out, the textbooks (and, of course, the unnamed exec) had things a little wrong.

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