The evolution of technology products can be analysed on multiple levels. Product categories go through continuous evolution determined by the cumulative changes in the features of new product models. This is manifested in the diffusion of new product features and in the increasingly vague boundaries between different product generations. This article develops an approach for planning and forecasting technology product evolution and the diffusion of new product features. This is achieved by isolating the phenomena underlying the evolution process, and formulating the process at the product category, product feature, and product model levels. The approach is derived from these formulations combining the primarily demand-driven product category diffusion and product unit replacement behaviour, and the more supply-driven product feature dissemination. The approach enables meaningful sensitivity analysis including the analysis of discontinuities. The developed approach is applied to characterise the evolution of an example product category of mobile handsets and to forecast the diffusion of mobile handset features using extensive longitudinal and cross-sectional data collected from Finland. In consequence, the process of technology product evolution and the phenomenon of product feature dissemination are suggested as extensions to research on product category diffusion and replacement. (C) 2011 Elsevier Inc. All rights reserved.