Adoption of Low Earth Orbit Satellite Systems: A Diffusion Model under Competition

Abstract

Low Earth Orbit Satellite (LEOS) systems have started providing communication with one phone number throughout the world. In this paper, the diffusion process of the two LEOS systems is analyzed under competition. We simulate the diffusion process under different scenarios. In these scenarios, we analyze issues related to the timing of product introduction, technology advantage and potential customer base. A model of the potential customer base with network externality is presented. We found that the timing of product introduction can have significant impact on the follower in the market. We found that a follower firm with more advanced technology would have higher probability to succeed in competing against the first mover. In addition, the increase in the potential customer base favors the firm with advanced technology. The network externality effect in the growth of the customer base favors both firms but could be an barrier for the follower to create a critical mass and beat the incumbent firm.