Monday, March 29, 2004

The birth, growth and death of software profitability 

The Natural History of Software Platforms
In line with Christensen's theory, I would assert that every "pure software" company that has had large-scale success first offered their customers enhanced productivity in the form of packaged proprietary software, followed later by a redefinition of that software as a platform to be used by customers for rapid customization and their extensibility needs. (Such platforms, besides solving customer problems, also have the salutary effect of ensnaring those same customers and extenders within their "ecosystems," slowly raising switching costs over time. Think of customers and small-scale participants in these ecosystems as boiled frogs...)

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