Consumer Evaluation of Digital Device Innovations: Disentangling Effects of Novelty and Familiarity

As digital devices increasingly integrate hardware and software features, firms must adopt innovation strategies that effectively balance novelty and familiarity to enhance consumer evaluation. While novel hardware components can introduce unique functionalities that attract consumers, excessive novelty may impede consumer acceptance. This study investigates how hardware component innovation strategies must navigate the delicate interplay between novelty and familiarity by examining two critical dimensions: the timing of hardware innovations (early vs. late) and the role of software-supported interaction (with vs. without related software support). By distinguishing between dominant design components familiar to consumers and non-dominant design components that are inherently unfamiliar, we uncover nuanced strategic insights. Our findings reveal that early introduction of dominant design innovations is crucial, and enhancing consumer interactions through software support significantly improves consumer satisfaction. Conversely, for non-dominant component innovations, a later market introduction proves more advantageous. Notably, software-supported interactions are less effective for these non-dominant innovations, as such support may inadvertently accentuate their unfamiliarity. These findings provide strategic guidance for smartphone manufacturers to leverage software-supported interactions and optimize the timing of hardware innovations to achieve an optimal balance between novelty and familiarity.