Osborne Computer pre-announced its next product — and killed its own sales

Osborne Computer Corporation was founded in 1980 and shipped the Osborne 1 in July 1981 — the world's first mass-produced portable computer. It was a runaway success: 11,000 sold in eight months, 50,000 units backordered, $73 million in revenue in its first 12 months. At its peak the company was selling 10,000 units a month and had grown from 2 employees to 3,000 in a year.

In early 1983, founder Adam Osborne began showing journalists and dealers the upcoming Osborne Executive and Vixen models — machines with larger screens, better performance, and a $2,495 price point. The demonstration was meant to build anticipation. Instead, it destroyed the company. Dealers cancelled Osborne 1 orders in droves, waiting for the new models. Sales dropped from 10,000 units a month to practically nothing.

Osborne cut the Osborne 1's price twice — from $1,995 to $1,295 in July 1983, then to $995 in August — but the damage was done. The company filed for Chapter 11 bankruptcy on September 13, 1983, roughly six months after the pre-announcement. A group of 24 investors sued for $8.5 million, alleging the company had masked its financial situation.

The phenomenon was named the Osborne Effect: the unintended market cannibalization caused by announcing a future product while the current product is still in its sales window. Osborne Computer emerged from bankruptcy in 1984 and released the Vixen and Osborne 3, but never regained its market position. The brand was later acquired by a Finnish PC maker, which sold Osborne-branded computers until its own bankruptcy in 2021.