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Charging Customers or Making Profit? Business Model Change in the Software Industry

Journal of Business Models

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Field Value
 
Title Charging Customers or Making Profit? Business Model Change in the Software Industry
 
Creator Peyton, Margit Malmmose
Lueg, Rainer
Khusainova, Sevar
Iversen, Patrick Sønderskov
Panti, Seth Boampong
 
Subject Business Models
Business Model change; software; innovation; freeware; logistics; lock-in
 
Description Purpose: Advancements in technology, changing customer demands or new market entrants are often seen as a necessary condition to trigger the creation of new Business Models, or disruptive change in existing ones. Yet, the sufficient condition is often determined by pricing and how customers are willing to pay for the technology (Chesbrough and Rosenbloom, 2002). As a consequence, much research on Business Models has focused on innovation and technology management (Rajala et al., 2012; Zott et al., 2011), and software-specific frameworks for Business Models have emerged (Popp, 2011; Rajala et al., 2003; Rajala et al., 2004; Stahl, 2004). This paper attempts to illustrate Business Model change in the software industry. Design: Drawing on Rajala et al. (2003), this case study explores the (1) antecedents and (2) consequences of a Business Model-change in a logistics software company. The company decided to abolish their profitable fee-based licensing for an internet-based version of its core product and to offer it as freeware including unlimited service. Findings: Firstly, we illustrate how external developments in technology and customer demands (pricing), as well as the desire for a sustainable Business Model, have led to this drastic change. Secondly, we initially find that much of the company’s new Business Model is congruent with the company-focused framework of Rajala et al. (2003) [product strategy; distribution model, services and implementation; revenue logic]. Value: The existing frameworks for Business Models in the software industry cannot fully explain the disruptive change in the Business Model. Therefore, we suggest extending the framework by the element of ‘innovation’.
 
Publisher Aalborg Universitetsforlag
 
Contributor —
 
Date 2014-08-21
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
Case study
 
Format application/pdf
 
Identifier http://journals.aau.dk/index.php/JOBM/article/view/721
10.5278/ojs.jbm.v2i1.721
 
Source Journal of Business Models; Vol 2, No 1 (2014): Special issue: The business model eruption
2246-2465
 
Language eng
 
Relation http://journals.aau.dk/index.php/JOBM/article/view/721/552
 
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