Telecommunications Policy 35 (2011) 7486

Contents lists available at ScienceDirect

Telecommunications Policy
URL: www.elsevierbusinessandmanagement.com/locate/telpol

Antecedents of consumers intentions to upgrade their mobile phones

Fang-Mei Tseng a,n, Hui-Yi Lo b
a
b

Faculty of International Business, College of Management, Yuan Ze University, 135 Yuan-Dung Rd., Chung-Li, Taoyuan 320, Taiwan
Faculty of Marketing, College of Management, Yuan Ze University, 135 Yuan-Dung Rd., Chung-Li, Taoyuan 320, Taiwan

a r t i c l e in fo

abstract

Available online 7 January 2011

The fourth generation (4G) mobile phone will soon be launched. Marketers need to know
which factors determine whether customers choose to upgrade their mobile phones, as
this will affect the diffusion of third generation (3G), 4G, and Worldwide Interoperability
for Microwave Access phones. This study integrates pre- and post-adoption theories,
upgrading, and value-based theory to examine plans to upgrade to a newer model mobile
phone among second generation (2G) and 3G mobile phone users. The empirical results
show that the technology acceptance model fails to explain consumers intentions to
upgrade in sequence. Although customers perceived next-generation mobile phones as
being easier to use and more useful than their current model phones, this did not directly
inuence them to upgrade. When users were satised with their current model, they were
not willing to upgrade to a newer generation model. Moreover, value assessments affect
users plans to upgrade to next-generation mobile phones.
& 2010 Elsevier Ltd. All rights reserved.

Keywords:
Upgrade
Mobile phone
Technology acceptance model (TAM)
WiMAX

1. Introduction
Compared to other durable goods, technology-based products have a distinctively brief lifecycle. Firms develop nextgeneration products to prot from consumers desires to upgrade. For example, older model cell phones are rapidly replaced
by newer models with augmented functions.
The penetration of mobile phone use in Taiwan was anticipated to reach 114.69% in 2009 (National Communications
Commission, 2009), which suggests that every individual in the country has at least one mobile phone. The National
Communications Commission report also shows that the number of second generation (2G) and 2.5 generation (2.5G) users
has decreased annually, whereas the number of 3G and 3.5 generation (3.5G) users has increased, indicating that Taiwanese
consumers tend to upgrade their mobile phones. However, the 4G mobile phone will soon be launched, and thus it is
necessary to analyze the factors that determine whether customers upgrade their mobile phones. Upgrading in turn affects
the diffusion of 3G, 4G, and even Worldwide Interoperability for Microwave Access (WiMAX) phones.
Previous studies have used logit regression or duration formulation and measurable variables to analyze the explanatory
variables associated with upgrading behavior (Kim & Srinivasan, 2009; Kim, Srivastava, & Han, 2001). However, these
methods cannot measure consumers cognitive or emotional perceptions of a product (e.g. a mobile phone). Yet emotional
assessments, cognitive perceptions, and other psychological factors combine to determine whether consumers will use or
buy a mobile phone (Asthana, 2009). They also affect consumers subsequent plans to upgrade their mobile phone to the nextgeneration model. Although upgraded phones have some innovative functions, they share the same basic functions as older
models. Therefore, customers experiences with the earlier model also inuence their desire to upgrade (Kim & Srinivasan, 2009).

Corresponding author. Tel.: 886 3 4638800 x 2691; fax: 886 3 4633824.

E-mail addresses: fmtseng@saturn.yzu.edu.tw (F.-M. Tseng), huiyi.lo@saturn.yzu.edu.tw (H.-Y. Lo).

0308-5961/$ - see front matter & 2010 Elsevier Ltd. All rights reserved.
doi:10.1016/j.telpol.2010.11.003

F.-M. Tseng, H.-Y. Lo / Telecommunications Policy 35 (2011) 7486

75

The existing marketing research has traditionally focused on pre-adoption or post-adoption decisions, with most research having
been conducted on the adoption of single-generation products. Despite its importance to both academics and product
manufacturers, upgrading behavior has rarely been studied.
Therefore, to bridge the gap in research between consumers initial adoption of a particular innovation and their
subsequent acceptance of innovations in that technology, this study explores the factors that affect consumers decisions to
upgrade to next-generation mobile phones. This study provides industry managers with valuable insights that can be used to
formulate effective marketing strategies.
2. Background
Digital mobile telecommunications networks were introduced in the early 1990s (Gruber & Verboven, 2001), and Taiwan
launched its rst digital mobile phone soon thereafter in 1995. Since then, nationwide mobile communication systems have
developed, with the penetration rate reaching 114.69% in 2009 (National Communications Commission, 2009).
The rst commercial launch of the 3G phone was by NTT DoCoMo in Japan in 2001 (UMTS, 2009). The technology reached
Taiwan in 2005, when all of the major domestic telecommunications providers launched 3G cell phones (TEEMA, 2005).
Although 2G mobile phones can support basic functions such as text messaging, voice calls, voicemail, and navigational
mapping, 3G mobile phones offer enhanced functionality. For example, these models offer Global Positioning System
navigation; music (MP3) and video (MP4) playback; personal digital assistant functionality; the ability to watch streaming
video or to download video for later viewing; video calling; built-in digital cameras and camcorders (for video recording);
ringtones; games; memory card readers; USB (2.0); infrared, Bluetooth (2.0), and WiFi connectivity; instant messaging;
Internet e-mail and Web browsing; and wireless modem connections. 3G mobile phones will also soon serve as a console
for online games and other high-quality games (Huh & Kim, 2008). Yet despite these advantages, 3G phones did not initially
perform well in the market. According to the National Communications Commission, the penetration rate for 3G technology
in Taiwan was 6% in 2005 and 14.75% in 2006. This suggests that mobile phones in Taiwan were still primarily used for voice,
rather than data, transmission, and that few people used the 3G technology (Taipei Times, 2007).
However, competition in the industry has helped keep prices low and has led to increased 3G sales since late 2008.
According to a National Communications Commission report, 11.29 million 3G phones were in use in Taiwan in 2009, with
about 60% of customers using value-added services (MEPO Humanity Technology Inc, 2009). Yet even as 3G keeps growing,
4G is emerging as the latest technology. 4G technology is marked by widespread availability, low-cost data delivery, and a
high degree of personalization and synchronization between various user interfaces; its development is being driven by
service (Rouffet, Kerboeuf, Cai, & Capdevielle, 2005).
Telecommunications Infotechnology Forum (1996) reported that Long Term Evolution and 4G will be tested in North
America, Western Europe, and East Asia in 2009. The number of Long Term Evolution users is expected to begin to increase in
2012. However, Taiwan has been an aggressive advocate of WiMAX, awarding six licenses in 2007; since then, the country has
spent $614 million on the peripheral development of the technology (Lee, 2007). However, some have criticized this
government-driven choice. For example, Tucker Grinnan, the head of regional telecoms equity research for the nancial
services company HSBC, argued that Long Term Evolution, not WiMAX, will be the technology of choice for 4G (Taipei Times,
2008). The cost of WiMAX will be too great for Taiwans telecommunications industry. Some Taiwanese service providers
launched WiMAX in the rst quarter of 2009. These services are cheaper than asymmetric digital subscriber lines and offer 3
to 4 times the speed.
3. Research model and hypotheses
According to Davis, Bagozzi, and Warshaws (1989) technology acceptance model (TAM), users tend to adopt a new
technology if they perceive that technology as being useful and easy to use. The TAM is applicable in the pre-adoption stage
and in the repurchase stage (Bhattacherjee, 2001; Thong, Hong, & Tam, 2006).
According to the expectationconrmation model (ECM) of post-adoption stage behavior, consumer satisfaction is a
signicant determinant of repurchase intentions (Bhattacherjee, 2001; Thong et al., 2006). That is, the more satised a
consumer is with his or her current product, the more willing that consumer is to make future purchases. However, studies
using the ECM do not explain how a customers use of an older generation product affects his or her pre-adoption intentions
for newer generation products.
Consumers buying intentions can be key determinants of whether they will upgrade to a newer model product.
Consumers may measure their own use of a product based on their perception of the services they are offered (Caruana,
Money, & Berthon, 2000; Zeithaml, 1988), which directly inuences their plans to upgrade. Therefore, the TAM, the ECM,
upgrade decisions, and perceived value can all be combined to explain the gap between pre-adoption and post-adoption
behavior.
3.1. TAM
Several studies have used the TAM to discuss adoption behavior with regard to mobile telecommunications technology
(Bruner & Kumar, 2005; Hung, Ku, & Chang, 2003; Lu, Liu, Yu, & Wang, 2008; Teng, Lu, & Yu, 2009). These studies have

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F.-M. Tseng, H.-Y. Lo / Telecommunications Policy 35 (2011) 7486

conrmed that perceived usefulness directly affects a consumers intention to use a new technology. The products perceived
ease of use indirectly inuences the consumers behavioral intention to use the new technology by directly impacting the
consumers attitude toward the product and the perceived usefulness of the product. Perceived usefulness and perceived ease
of use have signicant effects on pre-adoption and post-adoption intentions (Bhattacherjee, 2001; SeJoon, Thong, & Tam,
2006). Consumers intentions to upgrade can be regarded as a type of new product adoption or repurchase behavior. However,
these studies have all focused on single-generation products or services. According to Kim and Srinivasan (2009), a
consumers plans to upgrade to a next-generation product can be inuenced by the type of product (i.e. its relative
advantage). Thus, if 2G/3G mobile phone users perceive 3G/4G to be more useful compared to 2G/3G, they will in turn
consider 3G/4G mobile phones to be more useful than their 2G/3G counterparts. Therefore, the following hypotheses are
proposed:
Hypothesis 1. If users perceive a newer generation product as being more useful than a current product, they will have a
higher intention to upgrade.
Hypothesis 2. If users perceive a newer generation product as being easier to use than a current product, they will believe
that the newer generation product is more useful than the current product.
Hypothesis 3. If users perceive a newer generation product as being easier to use than a current product, they will have a
higher intention to upgrade.
The utility of the current and newer generation products can be an antecedent of the upgrading decision (Kim & Srinivasan,
2009). In other words, perceived value can inuence the intention to upgrade because it reects the utility of a product.
Moreover, Kim, Chan, and Gupta (2007) noted that usefulness as a perceived benet affects the overall measure of value
and thus plays a critical role in adoption intention. Davis et al. (1989) found that usefulness is used to assess the performance
of a specic application system before it is used. This concept of the task value of new technology is akin to the performance/
quality value in the multidimensional measure of perceived value (Sweeney & Soutar, 2001). Performance/quality value
refers to the utility derived from the perceived quality and expected performance of the product (Sweeney & Soutar, 2001,
p. 211). That is, the purpose of perceived usefulness and performance/quality value is to meet customers needs. Greater
perceived usefulness or performance/quality value may result in a higher overall consumer assessment of the value of a
product. Therefore, the following is expected:
Hypothesis 4. If users perceive a newer generation product as being more useful than a current product, they will believe
that the newer generation product is more valuable than the current product.
Kim et al. (2007) suggested that perceived value is also inuenced by perceived ease of use, which is dened as an element
of technicality. They reported that technical excellence can reduce physical, mental, and learning efforts because in
expectancy value models such as TAM, effort is considered an element of cost (a non-monetary sacrice). Technical
excellence refers to user friendliness and efcient technology adoption. Because perceived ease of use inuences the
& Brush, 2008), the following is hypothesized:
perceived value of a purchase (Anderson & Srinivasan, 2003; Pihlstrom
Hypothesis 5. If users perceive a newer generation product as being easier to use than a current product, they will believe
that the newer generation product is more valuable than the current product.
3.2. ECM and satisfaction
The ECM, proposed by Oliver (1980), holds that consumers intentions to repurchase a product or continue using a service
are inuenced primarily by their satisfaction with their prior use of that product or service. A users experiences with a
current-model product inuence his or her decision to upgrade to a newer model (Kim & Srinivasan, 2009; Kim et al., 2001).
Sweeney and Soutar (2001) posited that satisfaction is derived from the experience of using a product. Thus, in the postpurchase stage, customer satisfaction with a current product is one of the most signicant predictors of his or her behavior
(Oliver, 1980), intention to purchase the product in the future (Hellier, Geursen, Carr, & Rickard 2003; Oh, 1999), and plans to
continue using the product (Bhattacherjee, 2001). Similarly, there is also a relationship between satisfaction with the
manufacturer and decision to upgrade (Bolton, Lemon, & Verhoef, 2008), such that satisfaction affects rst the consumers
intention to upgrade and then the decision as to which product to upgrade to. Here, the following is assumed:
Hypothesis 6. Customer satisfaction with the current product positively inuences the intention to upgrade.
Kim and Srinivasan (2009) suggested that satisfaction may sometimes be used to evaluate post-adoption value. That is, the
appraisal of a customers current experience inuences how likely the customer will be to continue to use the product and to
make repeat purchases, which is known as cumulative satisfaction. Based on previous studies, Bolton (1998) postulated that a
customers subjective expected value of a product or service should depend primarily on his or her current cumulative
satisfaction. This indicates that prior satisfaction may have a positive relationship with the perceived value of the newer
generation product. Accordingly, the following is assumed:
Hypothesis 7. Customer satisfaction with the current product positively inuences the perceived value of a product upgrade.

F.-M. Tseng, H.-Y. Lo / Telecommunications Policy 35 (2011) 7486

77

3.3. Perceived value

Kim and Srinivasan (2009) suggested that the enjoyment or satisfaction a customer receives from a current product and in
the purchase of a next-generation product can affect the decision to upgrade. That is, perceived value affects consumers
intentions to upgrade because it is derived from utility. Furthermore, perceived value may affect consumers repurchase
intentions (Hellier, Geursen, Carr, & Rickard 2003; Oh, 1999) and pre-adoption intentions (Kim et al., 2007; Turel, Serenko, &
Bontis, 2007). This means that perceived value can be used to measure consumers opinions of product upgrades, as in the
following hypothesis:
Hypothesis 8. If users perceive a newer generation product as being more valuable than a current product, they will have a
higher intention to upgrade.
According to Sweeney and Soutar (2001), monetary value is the utility derived from the product due to the reduction of its
perceived short term and longer term costs (p. 211). They also indicated that emotional value denotes the utility derived
from the feelings or affective states that a product generates (p. 211). Monetary value and economic value are both
& Brush, 2008; Sachez, Callarisa, Rodriguez, & Moliner, 2006). Moreover,
important dimensions of perceived value (Pihlstrom
monetary value is signicantly related to behavioral intentions (Hellier et al., 2003) and repurchase intentions (Hong, Thong,
& Brush, 2008). Kim et al. (2007) proposed a similar concept of monetary value in which they
& Tam, 2006; Pihlstrom
conrmed the existence of a relationship between perceived price and perceived value.
& Brush, 2008). In the TAM,
Perceived enjoyment has also been analyzed in terms of repurchase intentions (Pihlstrom
perceived enjoyment is considered to be an emotional state that leads to behavioral intentions (Ahn et al., 2007). In addition,
Lim, Widdows, and Park (2006) suggested that perceived price may have a positive effect on perceived enjoyment. Sweeney
and Soutar (2001) demonstrated an interrelationship between value dimensions. Here, the following is expected:
Hypothesis 9. If users perceive a newer generation product as being more worthwhile than a current product, they will
believe that the newer generation product is more valuable than the current product.
Hypothesis 10. If users perceive a newer generation product as being less worthwhile than a current product, they will
believe that the newer generation product is more enjoyable than the current product.
Hypothesis 11. If users perceive a newer generation product as being more enjoyable than a current product, they will
believe that the newer generation product is more valuable than the current product.
Perceived enjoyment is predicted to be a strong antecedent of the intention to upgrade. It can also reect a consumers
perceived enjoyment of a product (Kim et al., 2007). Perceived enjoyment relates to feelings or affective states (Lim et al.,
2006; Sweeney & Soutar, 2001). This is in line with perceived enjoyment and fun in the TAM. Perceived enjoyment is a benet
or a reward derived from the adoption of a technology (Nysveen, Pedersen, & Thorbjrnsen, 2005) or from an activity
involving the technology (Kim et al., 2007). Therefore, it represents an affective and intrinsic benet of technology (Kim et al.,
2007). Perceived enjoyment and fun play a critical role in users intentions to adopt a technology (Ahn et al., 2007; Nysveen
et al., 2005). Thus, it is posited that consumers intentions to adopt an upgraded model of a product are inuenced by their
perceived enjoyment of the product:
Hypothesis 12. If users perceive a newer generation product as being more enjoyable than a current product, they will have a
higher intention to upgrade.
Davis et al. (1989) argued that perceived ease of use has a signicant inuence on the perceived usefulness of a technology,
which is in turn related to its performance. Accordingly, performance affects perceived price, because it reects the monetary
value of a technology. However, ease of use inuences savings in transaction costs or training costs (Thompson, Wang, &
Leong, 2004). Perceived price can also be interpreted in terms of cost savings; therefore, there is a positive link between
perceived ease of use and perceived price. Hence, the following is hypothesized:
Hypothesis 13. If users perceive a newer generation product as being easier to use than a current product, they will believe
that the newer generation product is cheaper than the current product.
4. Research methodology
4.1. Descriptive statistics
An online empirical survey was conducted to test the model. A Web-based investigation was appropriate for this research
because such an investigation uses reality-based pictures or dynamic videos. Discussions of the merits of Web-based testing
may be found in Birnbaum (2000; 2004) and Skitka and Sargis (2006).
This study used a scenario method. Participants were given a series of pictures that depicted users real-world behavior.
Respondents were Taiwanese men and women recruited over the period from April 4 to May 5, 2009. A link to the online
survey was given to mobile phone users who were students at Yuan Ze University in Chung-Li; a link to the survey was also

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F.-M. Tseng, H.-Y. Lo / Telecommunications Policy 35 (2011) 7486

posted on the PTT (the largest bulletin board system in Taiwan) of National Taiwan University, with members ranging in age
from 14 to 39 years old. Respondents were excluded from the study if they failed to complete the survey, had previously
completed it, or were not mobile phone users. Participants were informed that they would be entered into a prize drawing if
they registered and completed the entire questionnaire. Winners were notied by e-mail.
With regard to the sample of this study, Huh and Kim (2008) suggested that age has a signicant negative inuence on the
intention to purchase next-generation products, which suggests that younger people adopt technologies earlier and are more
willing to upgrade to next-generation products. The purpose of this research was to investigate antecedents to the intention
to upgrade. Thus, focusing on younger subjects can help elucidate the relationship between those critical antecedents and the
intention to upgrade. MIC (2006) also suggested that the age group between 16 and 35 represents a large fraction of mobile
phone consumers in Taiwan. In this survey, of the 1153 individuals who were initially recruited, 770 respondents were
included in the study, representing an effective response rate of 67%. The majority of respondents were between 19 and 24
years old. Table 1 presents a prole of the respondents included in the study. There were approximately equal numbers of
men and women.
Sony Ericsson was the most preferred brand of phone among the respondents. The most frequently used functions were
voice calls and messaging. The usage of 2G users (i.e. 2 hours per week) was less than that of 3G users (i.e. more than 6 hours
per week). Most of the respondents had replaced their mobile phones within the past 2 years and had bought them at
subsidized prices.
4.2. Measurement
The variables in the model were taken from the existing literature. Before the study, the items were pilot-tested.
The wording of items was reviewed and modied by experts in quantitative research based on the outcome of the pilot test.
The items used to measure each construct are shown in the Appendix. All items were measured on a 7-point Likert scale,
where 1 is disagree strongly and 7 is agree strongly.
4.3. Questionnaire design and procedure
There were four parts to the survey: introduction, registration, state of the current mobile phone, and questionnaire. The
introduction gave a detailed description of the survey, noted that it had been approved by the Department of International

Table 1
Sample characteristics.
Items

Gender
Age

Education

Occupation

Income (NT dollars)

Total

Male
Female
Less than 19 years
1924 years
2529 years
3034 years
3539 years
40 years and above
Junior high school (inc. below)
Senior high school
College/ Undergraduate
Graduate
Student
Education
Public servant
Business and Information
Financial service industry
Service industry
Industry
Others
Below 15,000 (inc.)
15,00125,000
25,00135,000
35,00145,000
45,00155,000
55,001 and above

2G users

3G users

Freq.

Percent.

Freq.

Percent.

Freq.

Percent.

401
369
49
496
172
41
6
6

52.1
47.9
6.4
64.4
22.3
5.3
.8
.8

234
211

52.6
47.4

20
19
572
154
565
26
16
20
7
34
7
36
601
46
39
44
21
19

2.6
2.5
74.3
20.6
73.4
3.4
2.1
2.6
.9
4.4
.9
4.7
78.1
6.0
5.1
5.7
2.7
3

32
281
99
26
4
3
17
15
321
92
322
17
9
8
4
23
6
17
350
24
20
27
16
8

7.2
63.1
22.2
5.8
.9
.6
3.8
3.4
72.1
20.7
72.4
3.8
2.0
1.8
.9
5.2
1.3
3.8
78.7
5.4
4.5
6.1
3.6
1.7

167
158
17
215
73
15
2
3
3
4
251
67
243
9
7
12
3
11
1
19
251
22
19
17
5
11

51.4
48.6
5.2
66.2
22.5
4.6
.6
.9
.9
1.2
77.2
20.6
74.8
2.8
2.2
3.7
.9
3.4
.3
5.8
77.2
6.8
5.8
5.2
1.5
3.3

Note: N = 770 (N2G= 445, 57.8%; N3G = 325, 42.2%); N2G: Number of participants who were 2G mobile users; N3G: Number of participants who were 3G
mobile users.

F.-M. Tseng, H.-Y. Lo / Telecommunications Policy 35 (2011) 7486

79

Business ethic committee at Yuan Ze University and described the reward scheme. In the registration stage, participants
demographic information was recorded. The state of the current mobile phone identied whether participants were mobile
phone users and whether they used 2G or 3G. The questionnaire obtained self-reported data on perceptions of using
Name
Email
Gender
Age
Income
Education
Occupation

Mobile Phone
Usage

Yes

Generation

3G

2G

Which brand?
Which functions?
How long?
How often (usage)?
How often (replacement)?

Which brand?
Which functions?
How long?
How often (usage)?
How often (replacement)?

Satisfaction with 2G

Satisfaction with 3G

Compare 2G and 3G
1. Perceived usefulness
2. Perceived price
3. Perceived ease of use
4. Perceived enjoyment
5. Perceived value
6. Intention to upgrade

Compare 3G and 4G
1. Perceived usefulness
2. Perceived price
3. Perceived ease of use
4. Perceived enjoyment
5. Perceived value
6. Intention to upgrade

End

Fig. 1. The owchart of online survey.

No

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F.-M. Tseng, H.-Y. Lo / Telecommunications Policy 35 (2011) 7486

next-generation mobile phones. Participants rst saw two generations of mobile phones (e.g. 2G vs. 3G) and were given
descriptions of each. They were asked to compare the two generations of phones when responding to each question. The
details of the procedure are shown in Fig. 1. As can be seen in the questionnaire section of Fig. 1, if the participants were 2G
users, they answered two sets of questions. The rst had to do with their adoption of and satisfaction with 2G (e.g. which
brand and functions they used). The second elicited their comparisons of the 2G and 3G phones. 3G mobile phone users
answered the same questions as the 2G users, but all of the questions and pictures referred to 3G and 3G/4G.
4.4. Reliability and validity analysis
Composite reliability is the most common index of the convergent validity of measures. It is used to check whether the
scale items measure the construct in question or other (related) constructs; a value of .70 or above is deemed acceptable
(Fornell & Larcker, 1981). Cronbachs coefcient alpha was used to test the inter-item reliability of the scales used in this
study. Cronbachs alpha assesses how well the items in a set are positively correlated with one another. In general, reliability
of less than .60 is considered poor, reliability in the .70 range is considered acceptable, and reliability greater than .8 is
considered good (Sekaran, 2003). As shown in Table 2, all of the alpha values were greater than the recommended level and
showed good reliability with Cronbachs alpha ( 4.7) in each construct.
Discriminant validity is the extent to which a measure diverges from other similar measures. Testing for discriminant
validity involves checking whether the items measure the construct in question or other constructs. With the exception of a
strong correlation between some constructs (e.g., perceived usefulness, perceived enjoyment), correlations were moderate,
weak, or nonexistent (Table 3). Additionally, Fornell and Larcker (1981) suggested that the average variance extracted (AVE)
can be used to evaluate it (Table 2). For adequate discriminant validity, the square root of the AVE should be greater than the
constructs correlation coefcient. As shown in Table 3, the AVE for all constructs was higher than their shared variances.
These results indicate that these constructs have adequate discriminant validity. Convergent validity is also supported as the
average variance extracted clearly exceeded .50 for all dimensions (Fornell & Larcker, 1981).
In addition, exploratory factor analysis was used to examine construct validity. The KaiserMeyerOlkin test and Bartletts
test of sphericity were rst used to assess the appropriateness of the correlation matrices for factor analysis. The
KaiserMeyerOlkin value of .912 for 2G versus 3G use exceeded the meritorious limit of .80 set forth by Hair, Anderson,
Table 2
Reliability and average variance extracted (AVE).

Constructs

2G/3G
AVE

Cronbach Alpha

3G/4G
AVE

Cronbach Alpha

Prior satisfaction
Perceived usefulness
Perceived price
Perceived ease of use
Perceived enjoyment
Perceived value
Intention to upgrade

.506
.834
.762
.738
.884
.770
.886

.899
.898
.898
.796
.930
.874
.940

.723
.839
.788
.757
.891
.789
.896

.895
.903
.865
.842
.938
.861
.941

Table 3
Correlations coefcient and AVE between constructs.
Constructs

SAT

PU

MON

PE

EMO

PV

INT

(a) 2G to 3G model
Prior satisfaction (SAT)
Perceived usefulness (PU)
Perceived price (MON)
Perceived ease of use (PE)
Perceived enjoyment (EMO)
Perceived value (PV)
Intention to upgrade (INT)

.711
.110(*)
.145(**)
.097
.159(**)
.108(*)
.079

.913
.676(**)
.548(**)
.687(**)
.705(**)
.583(**)

.873
.497(**)
.595(**)
.679(**)
.490(**)

.859
.549(**)
.502(**)
.376(**)

.940
.737(**)
.694(**)

.877
.737(**)

.941

(b) 3G to 4G model
Prior satisfaction (SAT)
Perceived usefulness (PU)
Perceived price (MON)
Perceived ease of use (PE)
Perceived enjoyment (EMO)
Perceived value (PV)
Intention to upgrade (INT)

.850
.241(**)
.233(**)
.138(*)
.291(**)
.263(**)
.254(**)

.916
.688(**)
.578(**)
.724(**)
.721(**)
.576(**)

..888
.492(**)
.635(**)
.623(**)
.484(**)

.870
.538(**)
.458(**)
.335(**)

.944
.725(**)
.662(**)

.888
.729(**)

.947

Note. The diagonal elements represent the square roots of the average variance extracted (AVE, Table 2). *p o .05. **p o .01.

F.-M. Tseng, H.-Y. Lo / Telecommunications Policy 35 (2011) 7486

81

Table 4
Factor loading.
(A) Comparison between 2G and 3G model
2G/3G
M
s
Intention to upgrade (INT)
INT3
4.69
1.547
INT1
4.85
1.439
INT2
4.87
1.473

INT

SAT

MON

PE

PU

EMO

PV

Comm.

.878
.839
.871

.020
.000
-.004

.127
.166
.162

.114
.102
.074

.140
.182
.127

.172
.265
.269

.169
.177
.150

.878
.877
.901

Prior satisfaction (SAT)

SAT2
4.91
SAT1
4.92
SAT4
4.89

1.285
1.256
1.337

-.041
-.007
.050

.933
.928
.880

.014
.004
.061

.002
-.020
.012

.025
.032
-.068

-.006
-.043
.064

.013
.009
.007

.873
.864
.790

Perceived price (MON)

MON1
4.02
MON3
4.02
MON2
4.37

1.309
1.346
1.334

.109
.218
.194

.038
.025
.061

.867
.797
.771

.211
.161
.093

.150
.318
.221

.157
.118
.278

.107
.173
.212

.869
.855
.815

Perceived ease of use (PE)

PE1
3.83
PE2
3.93

1.268
1.267

.129
.123

.011
-.019

.167
.210

.829
.826

.276
.120

.186
.203

.019
.206

.844
.840

Perceived usefulness (PU)

PU1
3.98
PU2
4.29
PU3
4.50

1.407
1.422
1.367

.129
.245
.331

-.010
-.015
.019

.291
.261
.336

.292
.156
.145

.808
.777
.607

.153
.327
.399

.132
.164
.162

.879
.891
.798

Perceived enjoyment (EMO)

EMO3
4.68
EMO1
4.55
EMO2
4.50

1.392
1.307
1.309

.282
.301
.373

.013
.002
-.009

.167
.256
.227

.132
.257
.254

.209
.257
.246

.791
.762
.737

.265
.159
.181

.864
.894
.892

Perceived value (PV)

PV2
4.62
PV1
4.74
PV3
4.16

1.075
1.028
1.389

.302
.308
.461

.004
.110
-.096

.234
.283
.345

.117
.165
.240

.163
.190
.357

.252
.387
.158

.799
.632
.446

.889
.799
.750

Extraction sums of squared loadings

Total
% of Variance
Cumulative (%)

9.613
48.064
48.064

2.544
12.721
60.785

1.620
8.1
68.886

1.074
5.37
74.256

.815
4.073
78.328

.788
3.938
82.267

.609
3.045
85.311

INT

SAT

MON

PE

PU

EMO

PV

(B) Comparison between 3G and 4G model

3G/4G
M
r
Intention to upgrade (INT)
INT2
5.4
1.16
6
3
INT1
5.3
1.20
2
5
INT3
5.4
1.27
2
1
Prior satisfaction (SAT)
SAT2
5.4
2
SAT1
5.3
9
SAT4
5.3
8
Perceived price (MON)
MON1
4.4
5
MON3
4.5
7
MON2
4.9
1
Perceived ease of use (PE)
PE1
4.2
5
PE2
4.3
9

Comm.

.864

.115

.147

.120

.164

.252

.202

.927

.860

.138

.151

.052

.137

.223

.217

.900

.841

.071

.150

.096

.205

.214

.169

.861

1.05
3
.958

.062

.914

.048

.036

.026

.068

.056

.852

.088

.898

.117

-.005

.069

.132

.085

.857

1.15
8

.104

.883

.026

.066

.080

.042

.021

.804

1.14
7
1.13
0
1.111

.130

.075

.832

.243

.147

.098

.115

.818

.168

.047

.810

.141

.238

.207

.160

.832

.220

.156

.674

.096

.299

.367

.175

.791

.082

.078

.196

.861

.183

.187

.052

.863

.123

.006

.178

.844

.210

.176

.152

.858

1.13
5
1.20
1

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F.-M. Tseng, H.-Y. Lo / Telecommunications Policy 35 (2011) 7486

Table 4. (continued )
Perceived usefulness (PU)
PU1
4.7
4
PU2
5.0
7
PU3
5.1
4
Perceived enjoyment (EMO)
EMO3
5.3
2
EMO1
5.11

1.19
8
1.17
5
1.18
7

5.0
7

1.16
3
1.08
3
1.10
9

Perceived value (PV)

PV2
5.0
3
PV1
5.2
1
PV3
4.7
1

1.00
1
1.02
5
1.22
8

EMO2

Extraction sums of squared loadings

Total
% of Variance
Cumulative (%)

.227

.082

.250

.309

.750

.123

.227

.846

.246

.128

.275

.228

.742

.291

.206

.882

.232

.063

.326

.158

.675

.411

.160

.840

.316

.138

.221

.143

.177

.790

.205

.885

.302

.130

.238

.273

.250

.743

.220

.903

.346

.123

.237

.276

.306

.686

.207

.874

.340

.069

.185

.111

.183

.256

.778

.871

.335

.165

.209

.130

.298

.364

.620

.806

.468

.079

.301

.204

.311

.123

.549

.771

2.253

1.621

1.006

.779

.706

.574

8.105

5.030

3.897

3.532

2.870

10.10
2
50.50
8
50.50
8

11.26
5
61.77
3

69.87
8

74.90
8

78.80
6

82.33
8

85.20
8

Note. (A) Comm. indicates communalities. KMO measure is .920, Bartletts test is signicant (w2 (190, N = 445)= 7588.626, p o .001).
Note. (B) Comm. indicates communalities. KMO measure is .931, Bartletts test is signicant (w2 (190, N = 325)= 5603.4, po .001).

Tatham, and Lack (1998).1 Moreover, the correlation matrix was signicant at the p o.001 level as assessed using Bartletts
test. Thus, both results demonstrated the factorability of the matrices considered. Principal components factor analysis with
varimax rotation and a factor loading of .5 was performed. Factor analysis revealed seven factors with eigenvalues totaling of
85.76% (2G vs. 3G).2 All seven factors showed a number of strong loadings, and all variables loaded substantially on only one
factor. The results of this analysis provided evidence of construct validity (Table 4).
5. Results
5.1. Model estimation
Two linear structural equation models using LISREL 8.5 were used to test for possible patterns of causal dependency among
variables. Then, a chi-square goodness-of-t test was used to assess the overall t of the models and to compare competing
models; indices based on derivatives of the tting function were used to suggest better tting models. Under the assumptions
justifying maximum likelihood estimation, a chi-square goodness-of-t measure allows a test of the null hypothesis that a given
model provides an acceptable t to the observed data. A model is said to have good t when the goodness-of-t index, comparative
t index, normed t index, and non-normed t index values are higher than .90; the root mean square error of approximation
value is less than .05; and the standardized root-mean-square residual is less than .08 (Browne & Cudeck, 1993). The overall results
suggested that the two structural models (2G vs. 3G and 3G vs. 4G) provided satisfactory model t (Table 5).
5.2. Hypotheses testing: the model with upgrading from 2G to 3G
The hypotheses were tested with a path analysis. Model A tested the determinants of the intentions of 2G users to upgrade to
3G technology (Fig. 2). Perceived usefulness and perceived ease of use did not inuence 2G users intentions to upgrade in
sequence; thus, H1 and H3 were not supported, even though perceived price and perceived usefulness partially mediated the
inuence of perceived ease of use on perceived value. This meant that perceived usefulness and perceived ease of use inuenced
2G users intentions to upgrade in sequence. However, perceived ease of use indirectly affected perceived value through perceived
price and perceived usefulness, with perceived usefulness signicantly affecting perceived value; thus, H2, H4, H9, and H13 were
supported. Perceived price positively affected the perceived enjoyment of 3G technology, supporting H10. In addition, consumers
1
2

The KaiserMeyerOlkin value was .931 for 3G versus 4G use.

Eigenvalues totaled 85.21% for 3G versus 4G use.

F.-M. Tseng, H.-Y. Lo / Telecommunications Policy 35 (2011) 7486

83

Table 5
Model t for models.
Fit criteria

Recommended value

w2/df
RMSEA
Normed t index (NFI)
Non-normed t index (NNFI)
Comparative t index (CFI)
Standardized RMR
Goodness of t index (GFI)

Results

Between 2 and 5
o .08
4 .9
4 .9
4 .9
o .08
4.8

Perceived price

2G/3G

3G/4G

4.25
.086
.96
.97
.97
.080
.85

3.70
.078
.97
.97
.98
.063
.87

0.69*

Perceived
enjoyment

0 .7

8*

Perceived
usefulness

0 .3 1

*
0.91

0.43*

0.11*

Perceived ease of use

0.14

- 0.01

-0
.23

0.12

Perceived
value

0.27*

Satisfaction

Prior satisfaction of 2G

-0.01

*
0.62

Intentionto
upgrade

Comparison between 2G and 3G

Fig. 2. Test results for 2G users: comparison between 2G and 3G.

perception of 3G technology as being more enjoyable than the 2G technology positively affected perceived value, which in turn
had a signicant effect on the intentions of 2G users to upgrade to 3G phones. Thus, H8 and H11 were supported. Similarly,
perceived enjoyment affected intentions to upgrade, supporting H12. Conversely, satisfaction with 2G had no signicant direct
effects on perceived value or on users intentions to upgrade; thus, H6 and H7 were not supported.
5.3. Hypotheses testing: the model with upgrading from 3G to 4G
Model B tested the determinants of the intentions of 3G users to upgrade to 4G technology (Fig. 3). The results were the
same as those for Model A.
6. Discussion and implications
6.1. Discussion
6.1.1. Partial support for the TAM
According to the TAM, if customers perceive a technology as being useful and easy to use, they will adopt that technology
(Davis et al., 1989). However, this study found that users who perceived newer generation products as more useful and easier

84

F.-M. Tseng, H.-Y. Lo / Telecommunications Policy 35 (2011) 7486

Perceived price

0.80*

Perceived
enjoyment

0 .8

6*

Perceived
usefulness

0 .2 0

*
0.90

0.42*

0.48*

Perceived ease of use

-0.1
6

-0
.22

0.05

0.00

Perceived
value

0.26*

Satisfaction

Prior satisfaction of 3G

0.03

*
0.73

Intention to
upgrade

Comparison between 3G and 4G

Fig. 3. Test results for 3G users: comparison between 3G and 4G.

to use did not necessarily have a greater intention to upgrade in sequence. Perceived usefulness and perceived ease of use only
partially inuenced the purchase of the next-generation product through their effects on the perceived overall value of the
product. Moreover, perceived ease of use affected consumers intentions to upgrade through monetary value and perceived
usefulness. These ndings provide only partial support for the TAM.
One explanation for this is that todays new technologies encourage more frequent upgrading. Consumers desires and
behavior are inuenced by their lifestyle and situational factors. Lifestyles involve a combination of products, consumption
styles, and patterns of behavior that reect consumers choices for how they spend time and money. These patterns of
behavior are frequently affected by the surroundings and situational factors. Nowadays, mobile technologies reach
customers around the world, and they are changing exponentially faster every day. Consumers attitudes toward upgrading
may be more closely linked to their perceived overall value of the product than to its ease of use or usefulness. Thus,
technology users who postpone upgrading take into consideration the gap between their current model and newer models.
6.1.2. No support for the ECM
The ECM, which seeks to explain post-adoption behavior, posits that consumer satisfaction is a signicant determinant of
intentions to repurchase (Bhattacherjee, 2001; Thong et al., 2006). However, it does not explain the change in users behavior
from using an older generation product to intending to adopt a newer generation product and the present study found that
satisfaction with the current product did not inuence consumers to upgrade. Although this result goes against the ECM, it is
reasonable. The literature upon which the ECM is built examined business-to-business service contracts, which are different
from contracts for consumer-oriented technological products. It may be that individuals do not make plans to upgrade to a
newer model because they either are satised with their current model or have no contractual constraints. Alternatively, the
college students in the present sample may have had budget constraints that made them less willing to purchase nextgeneration mobile phones when they were satised with their current models. In addition, as mentioned previously, mobile
technologies change rapidly over time, which can affect consumers motives for using a product. If consumers are satised
with their current models, they may not want to upgrade and have to constantly change their user behavior or learn a new
technology.
6.1.3. Upgrading behavior is determined primarily by perceived value
Perceived value was the most critical factor inuencing consumers intentions to upgrade in sequence. That is, individuals
who compare their current mobile phones with next-generation mobile phones and perceive the latter as being of greater
value tend to upgrade. Their decision to upgrade is determined by their subjective perception of value. In addition, perceived

F.-M. Tseng, H.-Y. Lo / Telecommunications Policy 35 (2011) 7486

85

enjoyment reects whether users are willing to purchase next-generation mobile phones directly. That is, when consumers
perceive that an upgraded model provides greater enjoyment and value, their desire to upgrade to that model increases.
However, the perception that a newer generation product is cheaper than a current product only partially inuences
consumers intent to upgrade. The degree of inuence depends on the customers perceptions that the newer generation of
product is more valuable than the current product. In addition, perceived value is inuenced primarily by perceived
enjoyment among 2G users and perceived usefulness among 3G users. Perceived enjoyment is very subjective. Mood or other
physiological conditions (e.g., inner conict) inuence what consumers buy and how they decide to upgrade. Therefore, if
consumers tend to upgrade from their current model, they may perceive being able to obtain gratication or pleasure from
their new model, especially if it is not expensive.
6.2. Implications
This research helps explain the relationship between satisfaction with an existing mobile phone and a consumers
intention to upgrade to a newer model. 2G/3G users satisfaction with their current mobile phone does not affect their
upgrading behavior. However, the perception of the newer generation product as being easier to use, more useful, cheaper, or
more enjoyable or providing more value will entice customers to upgrade. Therefore, managers should launch promotions
that boost value perceptions of the newest model. Moreover, mobile phones normally have a very short lifecycle because of
rapidly changing technology. Thus, upgrading to a newer generation model may reect a consumers good taste and sense of
innovation. By contrast, some individuals may be overwhelmed by such a dynamic market because they may be resistant to
change. These results suggest that when launching a new generation of product, marketers should consider the gap between
the current generation and the new generation, and the upgrading process should follow a proper sequence (e.g. 3G to 3.5G,
3.5G to 4G).

Acknowledgments
This work was partially supported by Grant NSC 97-2410-H-155-022-MY2 from the National Science Council of the
Republic of China. The authors would like to thank the anonymous reviewers for their insightful and constructive comments.
Appendix
See Table A1 here.
Table A1
Construct

Measurement

References

Perceived ease of use

Compared with the 2G, the 3G mobile phone is easier to use.

Compared with the 2G, learning to operate the 3G mobile phone is easy.
Compared with the 2G, the 3G mobile phone makes it easier to do what I want it to do.
Compared with the 2G, using the 3G mobile phone saves me time.
Compared with the 2G, using the 3G mobile phone improves my efciency.
Compared with the 2G, the 3G mobile phone is useful to me.
Compared with the 2G, using the 3G mobile phone gives me pleasure.
Compared with the 2G, using the 3G mobile phone makes me feel good.
Compared with the 2G, using the 3G mobile phone provides me with a lot of
enjoyment.
Compared with the 2G, the price of the 3G mobile phone is more acceptable.
Compared with the 2G, the 3G mobile phone is more worthwhile.
Compared with the 2G, I am more pleased with the price that I paid for the 3G mobile
phone.
I am very satised with my overall 2G mobile phone experience.
I am very pleased with my overall 2G mobile phone experience.
It was a wise choice to use my 2G mobile phone.
Compared with the 2G, please describe the overall value you perceive from the 3G
mobile phone.
Compared with the 2G, how would you rate the 3G mobile phone in terms of overall
value?
Compared with the 2G, I think the 3G mobile phone is more valuable.
Compared with the 2G, I intend to buy the 3G mobile phone rather than the current one.
Compared with the 2G, I intend to upgrade to the 3G mobile phone instead of using
the current one.
Compared with the 2G, it is very possible that I will upgrade to the 3G mobile phone.

Gefen, Karahanna, and Straub

(2003), Kim et al. (2007), and
Nysveen et al. (2005)
Gefen et al. (2003), Kim et al. (2007),
and Nysveen et al. (2005)

Perceived usefulness

Perceived enjoyment

Perceived price

Satisfaction

Perceived overall value

Future intention

Kim et al. (2007), Nysveen et al.

(2005), Pura (2005), and Sweeney
and Soutar (2001)
Chen and Dubinsky (2003), Kim
et al. (2007), Pura (2005), and
Sweeney and Soutar (2001)
Bhattacherjee (2001), Lim et al.
(2006), and Thong et al. (2006)
Garbarino and Johnson (1999), and
Oh (1999)

Bhattacherjee (2001), Castaneda,

Munoz-Leiva, and Luque (2007),
Jones, Mothersbaugh, and Beatty
(2000), Lin, Sher, and Shih (2005),
and Nysveen et al. (2005)

Note. This appendix shows items seen by 2G users; 2G and 3G were substituted with 3G and 4G, respectively, for 3G users.

86

F.-M. Tseng, H.-Y. Lo / Telecommunications Policy 35 (2011) 7486

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