Managing the transition of technology life cycle

Abstract

For a technology platform or paradigm, there are multiple generations of technology. In turn, multitude of products and/or services could be derived from each technology generation, which follows a life cycle and will be eventually replaced by the next generation. Here both old and new technologies are based on the same technology platform. In this research, we explore how to manage the transition of technology generations, from a macro level perspective. We develop analytical models and test them using a simulation technique. The results show how the key determining factors interact with each other, in particular, how the optimal switching time between technology generations is determined by such factors as technological uncertainty embedded in the technology, the cost to switch from one generation to another, and the utility which the economy enjoys by utilizing the technology platform. (C) 2003 Elsevier Science Ltd. All rights reserved.