Information Cascade in the Smartphone World
One commonplace example of information cascades can be seen in how popular Apple’s products are. In https://9to5mac.com/2018/10/03/iphone-xs-sales/, we can see how so many of Apple’s products are selling strongly. The iPhone XS sales are higher than last years iPhone X sales. Both of these phones are expensive flagship phones however. Their older model iPhone 7 is the number 1 selling phone, which leads us to ask the question: why are people willing to sacrifice newer generation hardware to buy an iPhone? This question can be solved by looking at information cascades.
Information cascades were defined in lecture as copying decisions of others because they convey info. iPhones were the pioneers in the smartphone industry. They have created quality phones for over a decade now. The first consumers quickly became loyal enthusiasts, and nearly everyone wanted to become a part of the iOS ecosystem. From here, we can see how people entering the smartphone market would tend to take the advice or mimic the decisions of the early adopters of this technology. Then, with continued reputable reviews, a majority of people to this day enter the smartphone market with an iPhone. As more and more people purchase an iPhone, a consumer gains more information about the quality of the product and is more likely to buy one themselves. As more and more of the population started trending towards buying iPhones, Apple decided to increase the incentive to stay within the ecosystem by adding things like iMessage that provide convenience for all iPhone users, and encourage conversation with other iPhone users. Now, with this new development, people reached a point where they are most likely to mimic the decision of all of their friends and either buy or switch to an iPhone.
The information cascade that results when people initially adopt a product in a new market can lead to a large powerhouse in the market, as evidenced by Apple. Even despite recent struggles with a rising competitive force in Chinese android manufacturers, Apple has still held a large percentage of the market share simply because people know that a lot of other people have iPhones, and therefore want to join the ecosystem to reap all the communication benefits. Additionally, they know that these phones have been reliable for their friends, they get pushed towards buying one themselves.