The Osborne Effect, a phenomenon of self-cannibalization, refers to the negative impact on a company's current sales when it pre-announces a future product.
Osborne Computer Corporation experienced the Osborne Effect when it prematurely announced the Osborne Executive, causing a decline in sales, inventory pile-up, and ultimately leading to the company's bankruptcy in less than 30 months.
Tech giants like Apple and Samsung have learned from this mistake and now maintain extreme secrecy around their upcoming products to avoid a sales slump on existing models.
While some companies strategically tease future products without triggering the Osborne Effect, industries with rapid obsolescence, such as smartphones and laptops, must be cautious in their product announcements.