Product development in IT and telecommunications information acquisition strategies

Abstract

Investment projects within information technology and telecommunication industries face high uncertainty with respect to future cash flows, especially due to technological innovations and changing markets. Competition among IT and telecommunications companies leads to rapid technological innovations, and companies develop new products amd product features in order to be competitive. We evaluate development of a product, to be launched when a higher telecommunications network opens at a pre-specified future date. The problem we focus on is how to develop a new product that is well adapted, both to capacity and features of the new network platform, as well as to consumer demand. We incorporate these features into the term "product quality", which we in our model formulate as a partially observed stochastic variable.