Cascades and the iPhone 7+
Recently in class we have been discussing a lot about information cascades, tipping points, and overall the general demand there is for a product. This article I have found highlights the unexpected demand for the iPhone 7+. In the article it is mentioned that there are a myriad of factors that go into understanding the projected sales of a product, and this time around Apple might have underestimated their profits. Included in this misjudgment could be the failure to account for the departed sales of Samsung’s Galaxy Note 7 after incidents of malfunctions, and the inability to understand customer desires, specifically the growing trend for larger screens. Due to Apple’s underestimation, they risk a loss of profits, as there is a chance they do not have the available supply to match the demand.
This is relatable to what we are learning in class because it is a great and relevant example of information cascades in current economic markets. As newer technology is introduced, more trends emerge; such as the want for bigger screens. This similarity between customers is very likely a factor of information cascades within a community. In addition we can apply this to the networks we examined in Chapter 17, regarding network effects and tipping points. One could argue that the demand for the new iPhone has past a tipping point Apple had not expected, and thus will grow towards a new equilibrium greater than originally thought. Overall, outlining the timeline for demand of Apple’s iPhone 7+ can help us students better understand just exactly what the role of information cascades is in not only markets we’ve analyzed in class, but in the world around us as well.