ISBN: 3790800090
TITLE: Modeling Software Markets
AUTHOR: von Westarp
TOC:

PREFACE V
ACKNOWLEDGEMENTS VII
1 INTRODUCTION 1
1.1 Modern Software Markets 1
1.2 Research Motivation 2
1.3 Research Objective 4
1.4 Structure of the Thesis 4
2 CHARACTERISTICS OF SOFTWARE MARKETS 9
3 EMPIRICAL ANALYSIS OF SOFTWARE MARKETS 13
3.1 Design of the Empirical Study 13
3.2 The Status Quo and the Future of ED1 Systems 17
3.2.1 Traditional EDI 17
3.2.2 The Future: WebEDI 25
3.2.3 Case Study: 3Com 27
3.2.4 Case Study: Karstadt 29
3.2.5 Case Study: Woolworth 31
3.3 The Use and Management of Enterprise Resource Planning Software 34
3.3.1 Standardized vs. Custom-made Business Software 36
3.3.2 Case study: Deutscher Fachverlag 38
3.3.3 Case Study: Heraeus 40
3.3.4 Case Study: Deutsche Bank 43
3.4 Office Communication Software 46
3.4.1 Spreadsheets 46
3.4.2 Word Processors 49
3.4.3 Office Suites 50
3.4.4 Case Study: Standardization of Office Communication Software at Deutsche Lufthansa AG 51
3.5 Comparison of Different Software Markets 56
4 MODELING DECISIONS ON SOFTWARE STANDARDS IN INFORMATION NETWORKS 63
4.1 Centralized Decisions on Communication Standards in Information Networks 64
4.2 Decentralized Decisions on Communication Standards in Information Networks 66
4.3 The Role of Intermediaries 68
4.3.1 Efficiency Increases Through Intermediaries in Information Networks 69
4.3.2 Optimum Number of Intermediaries in Information Networks and their Optimum Service Range 71
4.3.3 Example of Optimizing an Information Network 73
4.3.4 Empirical Evaluation of the Standardization Models 76
4.3.4.1 Heterogeneity and Compatibility Problems 77
4.3.4.2 Case Study: Guidelines for Standardization and Migration at Lufthansa AG 80
4.3.4.3 Centralized and Decentralized Networks 85
4.3.4.4 Model Parameter 88
4.3.4.5 Summary of the Evaluation 89
5 DIFFUSION OF INNOVATIONS AND NETWORK EFFECT THEORY 91
5.1 Diffusion Models 92
5.1.1 Diffusion of Innovations in Economic Literature 92
5.1.2 Network Models of the Diffusion of Innovations 95
5.2 Reconsidering Network Effect Theory 99
5.2.1 Existing Approaches 99
5.2.2 Common Drawbacks in Traditional Network Effect Models 104
5.2.2.1 Modeling Network Effects 105
5.2.2.2 Market Failure 105
5.2.2.3 The Bigger the Better 106
5.2.2.4 Homogeneous Network Effects 106
5.2.2.5 Costs of Network Size 107
5.2.2.6 Centralized and Decentralized Decision Making 107
5.2.2.7 Normative Implications 108
5.2.3 General Drawbacks of the Neo-Classical Paradigm 108
5.2.3.1 Absence of Externalities 109
5.2.3.2 Complete Rationality of the Homo Oeconomicus 109
5.2.3.3 Exclusion Principle 110
5.2.3.4 Consumption Paradigm 110
5.2.3.5 Separation of Consumers and Producers 110
5.2.3.6 Divisibility of Resources 111
5.2.3.7 Concave Utility Functions / no Complementarities 111
5.2.3.8 Absence of Transaction Costs 111
5.2.4 Towards an Interdisciplinary Theory of Network Effects 112
5.2.4.1 The Modeling Power Required of an Interdisciplinary Theory of Network Effects 112
6 SIMULATION MODEL OF THE SOFTWARE MARKET 115
6.1 Determinants of Diffusion Processes in Software Markets 116
6.2 Basic Model 118
6.3 Simulation Design 120
6.3.1 Network Structure 120
6.3.2 Preferences, Prices, and Network Effects 123
6.3.3 Dynamics of the Decision Process 124
6.4 Results of Simulating the Diffusion Process 125
6.4.1 Low Price Markets 125
6.4.2 High Price Markets 129
6.4.3 Varying Closeness and Centrality 133
6.4.4 Summary of the Results 136
6.4.5 Annotations to the Parameter Design 141
7 MARKETING IMPLICATIONS 145
7.1 Classifying Software Markets 146
7.1.1 Classifications in Recent Literature: The Myth of Unstable Monopolies 146
7.1.2 Market Scenarios and Vendor Roles 150
7.1.2.1 The Market for ERR Systems in the US 153
7.1.2.2 Market for ERR Systems in Germany 154
7.1.2.3 Market for EDI Solutions in Germany 154
7.1.2.4 The Market for EDI Solutions in the US 154
7.1.2.5 The Market for Office Communication Software 155
7.1.2.6 The Emerging Market for Web-EDI 155
7.1.2.7 Managerial Guidelines for Kings, Imperators, and Revolutionaries 156
7.2 Pricing in Software Markets 158
7.2.1 Literature Review 158
7.2.2 Simulation Design 159
7.2.3 Simulation Results 161
8 CONCLUSIONS AND FURTHER RESEARCH 169
8.1 Conclusions 169
8.2 Further Research 171
9 REFERENCES 177
10 APPENDIX 185
10.1 Appendix A: Questionnaire 185
10.2 Appendix B: Questions of the Field Study on EDI over the Internet 193
11 LIST OF FIGURES 195
12 LIST OF TABLES 201
13 LIST OF USED SYMBOLS 203
14 LIST OF ABBREVIATIONS 207
CURRICULUM VITAE 209
END
