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Who Will Be the Adopters of 3G Mobile Computing Devices? A Probit Estimation of Mobile Telecom Diffusion
Jonathan Wareham & Armando Levy Version of record first published: 18 Nov 2009

To cite this article: Jonathan Wareham & Armando Levy (2002): Who Will Be the Adopters of 3G Mobile Computing Devices? A Probit Estimation of Mobile Telecom Diffusion, Journal of Organizational Computing and Electronic Commerce, 12:2, 161-174 To link to this article: http://dx.doi.org/10.1207/S15327744JOCE1202_04

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JOURNAL OF ORGANIZATIONAL COMPUTING AND ELECTRONIC COMMERCE 12(2), 161174 (2002)

Who Will Be the Adopters of 3G Mobile Computing Devices? A Probit Estimation of Mobile Telecom Diffusion
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Jonathan Wareham
Department of Computer Information Systems Georgia State University

Armando Levy
Department of Economics North Carolina State University

We characterize the role of the diffusion of information in the demand (adoption) of mobile telephones in the United States. Different strategies for identification of the parameters of the diffusion process are discussed. Using survey data from 1994 and 1998 and a probit model of mobile phone adoption, we estimate the rate of diffusion and bounds for the long-run market shares for specific socioeconomic market segments. Implications for the diffusion of 3G mobile computing devices are explored. 3G mobile computing, telecommunications, diffusion, statistical analysis

1. INTRODUCTION: THE EMERGENCE OF 3G MOBILE COMPUTING DEVICES Recent industry forecasts suggest that by the year 2004, more than 40% of all e-commerce transactions will be initiated from a handheld device [1]. From its sibling, the mobile telephone, mobile computing has grown out of the current capabilities within wireless telecommunications to encompass not only voice-based communication but also active and passive versions of transaction management, digital content delivery, and telemetry services [2]. The current wireless networking standards, including time division multiple access, code division multiple access, and global systems for mobile communications, transmit at 9.6 to 19.2 kb/s and, although the growth in the mobile telecom network has been impressive by many measures, these speeds are significantly slower than most stationary applications and are therefore insufficient for functions requiring digital content delivery. Anticipating the growth of mobile computing, third-generation (3G) wireless technology standards are being negotiated through the International TelecommuCorrespondence and requests for reprints should be sent to Jonathan Wareham, Department of Computer Information Systems, Georgia State University, P.O. Box 4015, Atlanta, GA 303024015. E-mail: wareham@acm.org

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nication Union and should be finalized and commercially deployable by the year 2003. Third-generation standards will not only permit greater bandwidths from 384 kb/s to 2 mb/s but will also embrace multimedia transmission, integrating voice, data, and two-way video transmission. Despite the euphoric predictions from industry analysts, however, some skepticism exists as to both the speed and character of such forecasts. In simple terms, concerns have been raised not only about the adoption rates, but also the viability of applications that do not yet exist, but ones we will not be able to live without. In response, mobile commerce (m-commerce) advocates argue that the history of the Internet is an answer in search of a question [3], yet critics maintain that: (a) consumers remain unconvinced about the wireless Web, (b) wireless e-commerce content is limited, (c) the U.S. mobile payment structure complicates m-commerce deployment, (d) the capabilities of handheld computing devices have been completely overestimated, and (e) the U.S. wireless telecommunications industry is lagging behind the technology [46]. The differences between mobile telecommunications and mobile computing are not insubstantial. However, as one is arguably the parent of the other in terms of technology and end-user application, valuable insights from the diffusion of mobile telecommunications can guide managerial decision making about the growth and dispersion of mobile computing products. To this end, we conducted a study of the diffusion patterns of mobile telecommunications based on pooled cross-section survey samples of households conducted by Taylor Nelson Sofres. The first sample was gathered in 1994 and contains information from 8700 households, and the second sample was gathered in 1998 and contains information from more than 16 000 households. The data contain a variety of information about demographics: including income, location and constitution of household, profession, gender, race, age, and education. The main research question posed in this study is what socioeconomic factors are determinative to the diffusion of mobile telecommunications, and how can these findings can be extended to 3G mobile computing? To address these issues, we have organized this article as follows. In Section 2 we survey predominant practices within the econometric methods applied in the estimation of diffusion patterns and delineate the techniques we used in our study. We begin the analysis in Section 3 by estimating diffusion rates and upper bounds on the penetration levels across the population based on geographic area and income levels. Although the significance found in regard to both income and size of metropolitan area is illuminating, we continue the analysis by dropping the assumption that the diffusion process is the same across markets and focus on socioeconomic heterogeneity. We determine the socioeconomic factors that explain statistical variation in adoption rates for cellular phones and further use these factors to identify two distinctive groups with different diffusion rates as well as long-term market shares. Given this pattern of distinguishing diffusion speeds and saturation levels, in Section 4 we explore prospects for the diffusion of 3G mobile computing. 2. DIFFUSION MODELS The diffusion of technology and products has been approached from many different perspectives, including sociology [7], geography [8, 9], and marketing and con-

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sumer behavior [10]. Two common presumptions can be identified within the diffusion literature [11, 12]: 1. The intensity at which usage or ownership of a new technology spreads across an economy changes over time [13, 14], and 2. Plotting the usage or ownership of a new technology against time yields an S-shaped curve, frequently called a sigmoid or logistic curve [13, 15].

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In the tradition of Schumpeter [16], who regarded the diffusion process of major innovations as the driving force behind the economy, most modern work on diffusion theory is based on the epidemic approach, which is, as implied, based on theories modeling the spread of diseases. Grilliches [17] and Mansfield [13] pioneered the approach that views diffusion as resulting from the spread of information. This approach is based on two assumptions: (a) A potential user will adopt the technology on learning of its existence, and (b) information on the existence of the technology is spread by direct contact between the potential user and current user [18]. According to Mansfield [14], the number of nonusers adopting in a particular time period should increase as the proportion of users in the industry population increases because, as more information and experience accumulate, it becomes less of a risk to begin using the technology. The epidemic approach has been criticized on a number of grounds. The most frequently cited include [18]: Risk is reduced only as the number of users increases, ignoring other channels of information transmission, such as advertising [19]. Potential adopters are viewed as passive recipients rather than active seekers of information [20]. Technology is assumed to not change over time, ignoring improvements in flexibility, performance, and relative expense [21, 22]. The population of potential adapters is assumed to be homogeneous [15]. Relative profitability from adoption is assumed not to change along the diffusion path [12], and positive externalities are ignored. Another area of debate is the common practice of modeling technology adoption as an irreversible, all-or-nothing decision. As there is no obvious justification why technology adoption is a static, categorical decision, the practice is most likely a result of the data collection pragmatics. Although the decision to acquire a mobile telecommunications device can be registered in a binary response survey with reasonable confidence and consistent intuition, the data tell us little about variance in the level or type of use. Although this may be a moderate deficiency when analyzing mobile telephones, which are more or less homogenous in function, the problem is exacerbated by the heterogeneity of 3G mobile computing devices, for which a telephone is no longer just a telephone but rather constitutes any bundle of functions offered by telephones, personal data assistants, and so on. 2.1 Diffusion Estimation The most widespread way of estimating models of diffusion on pooled cross-section or aggregated time-series data is to use a two-stage procedure that was first in-

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troduced by Grilliches [17] in his seminal study on hybrid corn. In the first stage, a logistic, or some other S-shaped curve, is imposed on the data on a proportion of the adopters. In the second stage linear regression is used to explain the slope coefficient of the fitted curves representing diffusion speed, in terms of various exogenous factors. In addition, some studies have applied a one-stage estimation procedure in aggregate models of diffusion. In this instance, the parameters of a nonlinear diffusion curve, both the diffusion speed and saturation levels, are made functions of a set of economic variables, traditionally macro-economic variables. The model is estimated in one step with nonlinear estimation procedures or maximum likelihood methods. Economic variables are then used to determine both the penetration levels and rate of diffusion, mainly in the context of new product technologies [19, 10]. The assumption of population homogeneity has only recently been addressed in the marketing literature [23], where an approach was developed that explicitly considers the determinants of the individual adoption decision. One important variable is time, and how temporal conditions correlate with one or more key characteristics that are assumed to be crucially important in determining responsiveness to the technology. Differences in adoption timing happen because potential adopters differ from each other. This approach has been called probit [15] or rank [19] because the empirical application makes use of probit models and ranks firms by their significant characteristics. Our study represents a hybrid of these two perspectives. We began by estimating diffusion rates and upper bounds on the penetration levels across the population based on geographic area and income levels similar to a one-stage aggregate diffusion model. Although the significance found in regard to both income and size of metropolitan area was illuminating, we dropped the assumption that the diffusion process is the same across markets and focused on socioeconomic heterogeneity, as is common in probit [15] or rank [19] studies. We used socioeconomic factors that explain statistical variation in adoption rates for cellular phones to identify groups with different diffusion rates as well as long-term market shares. We conclude our analysis by identifying two groups from the population with distinctive diffusion speeds and saturation levels.

3. SURVEY DATA AND ANALYSIS The data used in this study consist of two cross-sectional survey samples of households recruited by Taylor Nelson Sofres. The first sample was gathered in 1994 and contains information from 8700 households, and the second sample was gathered in 1998 and contains information from more than 16 000 households. Each household filled out a questionnaire and submitted copies of its telephone bills. The questionnaire asked whether a household member owned a mobile telephone and questions related to the composition of the household, education level of the head of household, income, and other socioeconomic factors. In Table 1 we list the proportion of households that owned a mobile telephone in 1994. Because two of the main determinants of mobile-phone adoption are the wealth of the respondent and the potential size of the mobile-phone network, we seg-

A PROBIT ESTIMATION OF MOBILE TELECOM DIFFUSION

Table 1 Penetration Rates for Mobile Telephones 1994 Size of MSAa Incomeb under 7500 7500 to 9999 10 000 to 12 499 12 500 to 15 000 15 000 to 19 999 20 000 to 24 999 25 000 to 29 999 30 000 to 34 999 40 000 to 44 999 45 000 to 49 999 50 000 to 59 999 60 000 to 69 999 70 000 to 69 999 70 000 to 74 999 75 000 to 99 999 100 000 to 149 999 150 000 to 199 999 Non-MSA .000 .000c .012 .009 .005 .034 .021 .046 .085 .035 .083c .104 .149c 50 to 250 .000c .000c .024c .053c .040c .016 .038c .010 .101c .036c .083c .095c .143c 250 to 500 .000c .000c .000c .049c .039 .000c .104c .089c .064c .123c .151c .101c .148c 500 to 999 .000c .000 .000c .051c .030c .000 .059c .100c .139c .061c .140c .157 .163c .222c 1000 to 2500 .001c .017 .048c .068c .037 .052 .031 .040 .070 .060 .086 .137 .158 .179c .266 .353c .467c

165

2500+ .002 .024 .071c .073c .044c .048 .021c .055 .051 .060 .141 .135 .167 .189 .214 .318c .357c

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Note. MSA = metropolitan service area. aGiven in thousands. bGiven in dollars. cLess than 100 respondents.

mented the data by annual household income and the size of the metropolitan service area according to the U.S. Bureau of the Census (http://www.census.gov/). Cells in the table were excluded if there were fewer than 30 households in a category. 3.1 A Simple Diffusion Model of Mobile Phone Adoption Let xt be the population of a particular market segment t time periods after the introduction of a new technology. Let zt be the number of people in the population who have adopted the new technology at time t. Define [0, 1] as the long-run market penetration of the technology in the population, hence in the long run xt and zt will be related as z = x.
t t

For a mature technology, any diffusion of information about the benefits of adoption has occurred, and market penetration centers around the equilibrium level that depends on price, availability of competitive technologies, current consumer tastes, and general economic conditions. We expect to drift slowly with time. For a new technology the population dynamics are very different. When a new technology is introduced there is often little known about the potential benefits of adoption. When successful, a small group of initial users learn the benefits of the new technology, and this information spreads to other potential customers, who quickly adopt the new technology [14]. Let yt [0, 1] denote the proportion of the

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potential market that is informed about the benefits of the new technology and has adopted it. Hence, in a the case of a new technology, the equation for market penetration becomes z = yx,
t t t,

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where the trajectory of yt is governed by the diffusion of information in the population. We expected that different thresholds of information will be necessary for different consumers to adopt the technology. Some consumers will adopt immediately, whereas others will hold out until they receive multiple favorable reports. To capture this, we imposed the condition that yt exhibit an inverted S shape when graphed against time. A class of functions that exhibits this shape is the set of all probability distribution functions of a positive random variable. The random variable can be interpreted as the amount of time before a typical consumer hears convincing evidence that the benefits of adoption outweigh the costs [24]. Let y t = f (u | )du where is the density function of some positive random variable
0

with parameter , which describes the mean, variance, and all other aspects of the distribution. Hence, while describes the long-run market share, describes the trajectory or diffusion to the long run. If we assume a constant growth rate of in the population, this gives:
zt = K e t f (u)du ,
0

where K is the size of the population at the time the technology is introduced (t = 0). Hence, to forecast the size of the market for a new technology at some future time (t > 0), we need to know the long-run penetration and the parameters of the diffusion process . As an example, Figure 1 shows a sample diffusion where = and yt evolves as a gamma distribution with shape parameter = 5. The population growth rate is 5%. Moreover, at any time t in the short run we may observe the current and past z market shares t = y t , but without an estimate of the diffusion parameters we xt z cannot infer from the market shares t . For any trajectory of market sizes, we xt cannot distinguish between a slow diffusion to a large long-run market (big , shallow (t)) and a fast diffusion to a small market (steep (t), small ). To identify the parameter of the diffusion process we need to impose some structure on yt [24]. When the new technology is introduced simultaneously to different market segments, we can use the adoption rates across markets to identify the structure of the diffusion process. Suppose the technology is offered simultaneously in n different markets, each with a possibly different long-run equilibrium i, i = 1, , n. The market segments can be different geographic regions (countries, states, cities) or different socioeco-

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Figure 1.

An example of the diffusion process.

nomic groups within a single area (agesex categories, high vs. low income, etc.). For z each market at time t we have it = i y it where the index i denotes different markets. x it If we impose the condition that the diffusion process is the same across all n markets, then we have yit, and the long-run market shares are all identified up to scale; that is, z 1t given any t, we can solve for the others. For example, if we know t, then y t = 1 x 1t z and we can identify any from the current share it . This allows us to bound the x it long-run market sizes in the following way: Let t = max(t,, t) without loss of z y z 1t . Hence, (t,, t) (1, t(1), generality. Write i = i ( 1 ) = it t where y t = 1 x 1t x it , t(1)) gives a crude boundary for the long-run market sizes in each of the n markets. These boundaries can be narrowed if we hypothesize a maximum market size [25]. If the largest market share that can be imagined is < 1, then our boundaries can be sharpened to (, 1(), , n()). As an example, Table 2 gives the upper bounds on market size implied by the penetration rates in 1994, which are given in Table 1. As one might expect, the long-run market shares are largest among households with high levels of income and there are slightly higher rates in larger metropolitan areas. Although this is illuminating, the assumption that the diffusion process is the same across markets is a strong one and may not fit well when market segments have different attitudes toward experimentation with new products. This bounding approach is more appropriate when markets are geographically distinct but similar in socioeconomic terms. It is unfortunate that, in these cases, the variation in penetration rates that helps to identify the different long-run market shares is likely to be small. For example, when we examined penetration rates across census areas in 1994, we noted that the values fall between 5.7% and 12.4% (in 1998, the range narrowed to 18% to 24%), whereas in Table 1 (which we set up to illustrate large variations in penetration rates) the values range from under 1% to over 46%.

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Table 2 Upper Bounds for Long-Run Market Share Size of MSAa

Incomeb under 7500 7500 to 9999 10 000 to 12 499 12 500 to 15 000 15 000 to 19 999 20 000 to 24 999 25 000 to 29 999 30 000 to 34 999 40 000 to 44 999 45 000 to 49 999 50 000 to 59 999 60 000 to 69 999 70 000 to 69 999 70 000 to 74 999 75 000 to 99 999 100 000 to 149 999 150 000 to 199 999

Non-MSA .000 .000 .026 .019 .011 .073 .045 .098 .182 .075 .178 .223 .319

50 to 250 .000 .000 .051 .113 .086 .034 .081 .021 .216 .077 .178 .203 .306

250 to 500 .000 .000 .000 .105 .084 .000 .223 .191 .137 .263 .323 .216 .317

500 to 999 .000 .000 .000 .109 .064 .000 .126 .214 .298 .130 .300 .336 .349 .475

1000 to 2500 0.002 0.036 0.103 0.145 0.079 0.111 0.066 0.086 0.150 0.128 0.184 0.293 0.338 0.383 0.570 0.756 1.000

2500+ .004 .054 .152 .156 .094 .102 .045 .118 .109 .128 .302 .289 .357 .405 .458 .681 .764

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Note. MSA = metropolitan service area. aGiven in thousands. bGiven in dollars.

Another description of the diffusion process would allow different processes yt across markets. For example, we might expect young, technology-literate individuals to have a higher rate of adoption then say, retirees over 65 years of age. We also expect the rate of adoption to be positively related to the long-run market share 1. When the diffusion is positively related to the long-run market share (the most likely case), a higher penetration rate for one market over another at any point in time will persist, but over time we expect large variations in adoption rates early in the diffusion and to lessen later [26]. Socioeconomic factors that explain statistical variation in the adoption rates for cellular phones will identify groups with different diffusion rates as well as long-run market shares. Furthermore, we expect the explanatory power of these factors to decrease over time [27]. In the next section we specify a class of diffusion processes that vary with the long-run market size.

3.2 A Diffusion Model of Market Heterogeneity As a first step, we need to identify the socioeconomic factors that differentiate market segments for cellular phones. Table 3 displays maximum likelihood estimates for a probit model of cellular adoption from our sample. Estimates are shown from the 1994 sample, the 1998 sample, and the combined sample. The results give a sharper view of the socioeconomic factors that differentiate markets. In Table 3 one can see that the most important predictor of cell phone adoption is income, which is strongly significant across all three models. The population of the

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geographic area of the household (the size of the censuss metropolitan service area) is also a positive predictor of cell phone demand, along with being married. The occupation of the head of household is a very strong predictor of cell phone adoption. As one might expect, people in sales positions consistently adopt cell phones at the highest rates, followed by executives, whereas professionals do not adopt at significantly higher rates than the general population. Given the travel inherent in sales and executive positions, this confirms our intuition. It is interesting that African American respondents adopted cell phones at higher rates than the general population, whereas Hispanic and Asian respondents are not statistically different from the general population. One household characteristic was found to be a consistent negative predictor of cell phone adoption: the presence of children. Because households with children are generally less mobile than those without, this is expected. It is interesting that neither education nor age seems to be a significant predictor of mobile phone adoption.

3.3 Market Heterogeneity and Long-Run Market Share Although the results of Table 3 help to identify groups of the population with different diffusion processes, we still need to formalize a link between the long-run marTable 3 Probit Maximum Likelihood Estimates Sample 1994a Variable Constant Income Education level Age Population Household size Own residence Married Children Executive Professional Sales position Student Hispanic African American Asian Dummy (1998) Log likelihood
an

1998b SE 0.1248 0.0072 0.0237 0.0107 0.0125 0.0243 0.0610 0.0625 0.0641 0.0579 0.0648 0.0789 0.1867 0.0978 0.1144 0.1753 M 1.6699* 0.0718* 2.6004 0.0021 0.0098 0.0408* 0.1332* 0.0615* 0.1331* 0.1138* 0.0301 0.1808* 0.0138 0.1324* 0.0409 7792 SE 0.1713 0.0028 0.0106 0.0039 0.0053 0.0149 0.0329 0.0307 0.0376 0.0348 0.0396 0.0505 0.0344 0.0660 0.1732 M

Pooledc SE 0.0555 0.0025 0.0095 0.0037 0.0049 0.0094 0.0267 0.0271 0.0226 0.0293 0.0329 0.0421 0.0323 0.0568 0.1227 0.1305

M 2.4894* 0.1103* 0.013 0.0355* 0.0404* 0.0565* 0.1667* 0.1199 0.0386 0.4190* 0.0081 0.5498* 0.4144* 0.0109 0.2924* 0.2195 2195

2.2155* 0.0777* 0.0085 0.001 0.0148* 0.027* 0.0222 0.0916* 0.0655* 0.2067* 0.0061 0.2813* 0.0193 0.1576* 0.0936 0.3059 10 063

= 8731. bn = 16 089. cn = 24 820. *p < .05.

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ket share and the diffusion process yt. To capture the dependence of the diffusion on the long-run market share, we specify our diffusion as:
t

yt () =

f (u)du = F(t),

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where is a parameter to be estimated. This specification allows us to rescale the time dimension of a baseline diffusion according to and . Hence, is the diffusion process when the long-run market share is 1, and for any < 1 the rate of diffusion will be proportionally slower. For example, if = .5, then at time t: yt(.5) = F(t/2) , whereas if = .25 then yt(.25) = F(t/4) . The parameter serves to scale the baseline diffusion to the data. When we have measures of the adoption rates at two points in time for a market segment we can estimate both and . If we observe penetration rates at two time periods:
sit = xit x and si.t +l = i ,t +k then: zit zi ,t +k

(1)

sit = i F( it) and si ,t +k = i F( i[t + k ]),

(2)

which gives two nonlinear equations in two unknowns. Solving the system will give us estimates of and . However, if two or more market segments are available then we can identify each parameter for each market and . Using the results presented in Table 3, we estimated diffusion curves for two different population groups with disparate adoption rates. In Group 1, which we call the fast adopters, we include all households in which the occupation of head of household was either a sales or an executive position, the income was over $40,000 per year, and no children were present. All other households fall into Group 2, which we categorize as the general population. In 1994, 18.6% of Group 1 households owned a cellular phone, whereas only 6.4% of Group 2 households owned a cellular phone. In 1998, these figures had grown to 31.3% and 20.7%, respectively. Using these figures, we solved for 12 and by solving the system of four equations given by Equation 2 for Groups 1 and 2.1 The solutions are given by 0.324, 0.237, and 3.19; hence, we predict a long-run market share of 32.4% for Group 1 and 23.7% for Group 2. Figure 2 shows the diffusion processes for Groups 1 and 2 measured in years since 1990. We see in the figure that in 1994 about 60% of households in Group 1 who would adopt cellular technology in the long run has done so, whereas only about 30% of the households in Group 2 had adopted it. However, by 1998 more than 90% of the long-run market in Group 1 had adopted, as had over 85% of the Group 2 market.

1We did this with a modified NewtonRaphson algorithm.

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Figure 2.

Estimated diffusion processes for Groups 1 and 2 from 1990.

4. IMPLICATIONS FOR 3G MOBILE COMPUTING DEVICES We can continue to expect to see a positive correlation between income levels and mobile telephone adoption. This trend can be intuitively extended to mobile computing applications as well. Although the size of the metropolitan area of the household is also a positive indicator, this factor is more ambiguous. First, we expect colinearity with income and the size of the censuss metropolitan service area. Second, there is most likely a weak implication that the positive correlation results from positive network externalities; that is, the value of the mobile telephone is correlated with the size of the network. The degree to which these factors are equally relevant in the relationship between city size and 3G mobile computing devices is difficult to postulate, but we believe that it would have less significance with mobile computing applications that are increasingly heterogeneous in function. The occupation of the head of household is a very strong predictor of mobile phone adoption; in particular, people in sales positions consistently adopt cell phones at the highest rates, followed by executives, and professionals do not adopt cell phones at significantly higher rates than the general population. We expect this correlation to be equally strong, if not stronger, in 3G mobile computing applications because we assume that a great deal of the functionality offered in these devices will complement and support professional occupations. For example, doctors, who are less mobile, may be prone to use one type of device, whereas individuals in sales and executive positions may adopt another, given the travel inherent to these positions. Hence, as 3G applications become increasingly heterogeneous we would look for occupation as a positive predictor of both adoption rate and type of application. There are a number of positive predictors of cell phone demand that are intuitively more opaque. African American respondents adopted cell phones at higher rates than the general population, whereas Hispanic and Asian respondents were not statistically different from the general population. Not only is this result difficult to understand in the context of mobile telecommunications, but also it is equally problematic to extrapolate to mobile computing applications. We also

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found one household characteristic to be a consistent negative predictor of cell phone adoption: the presence of children. Because households with children are generally less mobile than those without, this is does not contradict intuition. Conversely, being married is positively correlated with mobile phone adoption. Finally, neither education nor age seems to be a significant predictor of mobile phone adoption. As mobile computing applications emerge, it will be interesting to determine if, and why, significant differences emerge within ethnic groups. Moreover, it is often assumed that education levels equate with greater technical literacy and, hence, higher adoption rates. This certainly has not proven correct in our sample, but differences may emerge if 3G applications become more technically demanding. However, as most products within multimedia and telecommunications evolve, user friendliness has been consistently stressed in an effort to broaden the market to the general population. If this is the case with 3G applications, then education level may continue to be insignificant. A similar argument can be made concerning age. To the degree that applications require technical savvy, we may find some negative correlation with age and adoption levels. Should applications be designed to serve the needs of a general market, which is probable, then age will not be a significant predictor. This analysis offers some additional provocative insights for 3G mobile computing devices. In identifying two major groups in the popular as either fast adopters (Group 1) and normal representatives of the population (Group 2), we can make certain predictions about mobile computing applications. In instances where specific segments of the population can be identified as fast adopters, their adoption rates will likely be significantly faster than the rest of the population. Marketing expenditures targeted at these groups, who are normally considered rich target markets, may in fact be delinquent and suboptimally applied. For example, as early as 1994, about 60% of the households in Group 1 who would adopt in the long run had already done so, whereas only about 30% of the households in Group 2 had adopted mobile communications! Although speculative, few would claim that it was common belief that 60% the market for sales professionals was penetrated as early as 1994. As early as 1996, Group 1 was approaching full saturation levels at 85%, whereas Group 2 remained at roughly 55%, a difference of 30%. By 1998, Group 1 had attained 90% saturation, whereas Group 2 had attained 85%. So, not only are diffusion rates significantly faster in the intuitively appealing target markets, but also long-term saturation rates may arrive earlier than otherwise anticipated (see Figure 2).

4.1 Limitations As we mentioned earlier, extrapolating sample results to a subsequent genre of technology presents several challenges. Adoption of mobile telephones is fairly simple and can be captured in a binary response model as an all-or-nothing decision without extreme oversimplification, but 3G computing devices will be both more sophisticated and heterogeneous. Modeling adoption as a static decision may neglect important information about level and type of use. Second, the assumption

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that mobile computing is a logical descendant of mobile communications may not hold as the breadth of functionality expands. Finally, in this study we neglected to address the manner in which mobile communications technology has improved through time. As technology improves in terms of efficiency and applicability, it should be possible to identify different development stages, or generations, presenting distinct diffusion courses [18]. The improvement of technology is an important parameter that determines its diffusion path, but we neglected this in this study. For 3G computing devices still in conception the relative evolution in the functionality/yield relationships should significantly affect diffusion patterns.

5. CONCLUSIONS We examined the diffusion of mobile telecommunications on the basis of a cross-pooled sample of data from 1994 and 1998. We found that, as expected, mobile telephone adoption is positively correlated with income and metropolitan area and is strongly correlated with occupation, specifically, sales and executive professionals. However, other parameters of our estimated model were curious. For example, we found that one ethnic group, African Americans, adopted mobile phones at a rate significantly faster than that of the general population, whereas families with children were clearly negatively correlated with rates of mobile phone adoption. Contrary to expectations, neither age nor education level was correlated with mobile phone adoption. Given these socioeconomic parameters, we have identified two distinctive groups of the population: fast adopters and the general population. We have extrapolated these findings to predict the adoption of mobile computing devices. We expect that occupation will continue to be an important predictor of 3G mobile computing devices, as the functionality offered will support specific professions. Our analysis also suggests that neither age nor education will be determinative of 3G mobile computing devices, assuming that the interface design of these devices is targeted toward the general population and does not require above-average technical proficiency. Finally, our analysis suggests that there will be specific groups in the population that adopt 3G computing devices at a rate significantly faster than that of the general populace. In the instance that these groups can identified, penetration levels in these groups will be substantially higher than is commonly expected of the population at large. This has implications for development and marketing of 3G mobile computing products.

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