Adam Osborne and the Osborne Effect: What Really Killed His Company

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In 1981, Adam Osborne released the Osborne 1, a self-contained personal computer priced at $1,995 with a built-in 5-inch screen and bundled word processing and spreadsheet software. It weighed around 24 pounds and was roughly the size of a sewing machine, but it proved that computing could travel. Two years later the company filed for bankruptcy, and his name became shorthand for a business blunder: announcing a future product so early that customers stop buying the current one.

This episode tests that textbook story against the accounts of people who were there. Osborne did show prototypes of the Osborne Executive and the Vixen to journalists in early 1983, and dealers did cancel orders. But former employees point to a rival, Kaypro, selling a nine-inch screen for $400 less, and Osborne's own memoirs describe a ruinous plan to salvage old motherboards. The episode then follows the Osborne effect through later casualties, including Nokia's burning platform memo, and asks how the same dynamic became the business model of crowdfunding.

• Programmer Mike McCarthy argued that customers did not wait for the $2,495 Executive and its seven-inch screen. They bought the cheaper Kaypro instead.
• A vice president's plan to recover $150,000 worth of obsolete Osborne 1 motherboards by building complete machines around them ended up costing $2 million.
• North Star Computers made the same mistake in 1978 by announcing a floppy disk controller with double the capacity at the same price.
• Talk of high definition television in the early 1990s depressed regular TV sales even though HDTV did not become a household standard for another 15 years.
• Nokia CEO Stephen Elop declared Symbian a burning platform in 2011, a full year before Windows Phone devices were ready, and Nokia sold its phone division to Microsoft in 2013.