IS

Zhou, Zach Zhizhong

Topic Weight Topic Terms
0.283 procurement firms strategy marketing unified customers needs products strategies availability informedness proprietary purchase resonance policies
0.220 software development product functionality period upgrade sampling examines extent suggests factors considered useful uncertainty previous
0.187 consumer consumers model optimal welfare price market pricing equilibrium surplus different higher results strategy quality
0.135 software vendors vendor saas patch cloud release model vulnerabilities time patching overall quality delivery software-as-a-service

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Zhu, Kevin Xiaoguo 1
competition 1 game theory 1 lock-in 1 Language of Keywords: Esperanto 1
open-source software 1 proprietary software 1 software 1 switching cost 1

Articles (1)

Lock-In Strategy in Software Competition: Open-Source Software vs. Proprietary Software. (Information Systems Research, 2012)
Authors: Abstract:
    Open-source software poses a serious challenge to proprietary software vendors. "Lock in customers" seems a tempting strategy for proprietary software vendors, who attempt to lock in customers by creating switching costs. This paper examines whether such a lock-in strategy will indeed benefit proprietary software vendors facing competition from open-source software, who can credibly commit future prices. Developing a two-period duopoly model in which software products are differentiated and customers are heterogeneous, we find that the lock-in strategy is actually counterproductive in competing against open-source software. In fact, giving customers the freedom of choice may end up benefiting the proprietary software vendor. In terms of the broader effect, we find that lock-in reduces overall social welfare, but certain customers may actually be better off with it. Finally, we show that the lock-in strategy works differently for different types of customers in the software market (i.e., foresighted versus myopic customers). This suggests that customer behavior could significantly alter the equilibrium strategy of software vendors.