The Changing Software Business: Moving from Products to Services

The dramatic changes in the software business over the past few years have important implications for both users and producers of software products and services. Traditional product sales and license fees have declined, and product company revenues have shifted to services such as annual maintenance payments that entitle users to patches, minor upgrades, and often technical support. A dramatic shift is under way in the enterprise-software industry as established vendors embrace services in the wake of declining product revenues. It remains to be seen whether life-cycle dynamics or business-model choices are behind the long-term trend.