Abstract

PEREZ PATINO, Ana Lucía  and  ROBLEDO VELASQUEZ, Jorge. Growth of late entrant firms of the software industry: a model of multigenerational product diffusion with network effects. Rev.fac.ing.univ. Antioquia [online]. 2012, n.65, pp.60-73. ISSN 0120-6230.

This article presents a growth model of two companies -Pioneer and Late Entrant- in markets of standardized software. The model proposed is defined in terms of the dynamic behavior of sales of multiple product generations subject to network effects. The validation compares model simulations with historical data from two pioneer companies ANSYS INC. and SYMANTEC Corp. and from two late entrants CIMATRON Group and Check Point Software Technologies Ltd.. It is finally concluded that the strategies for a late entrant to survive in the market are as follows: i) investing in R&D to spread and replace successive product generations; ii) increasing the installed base by reinforcing network effects; and iii) Controlling the timing of the market entry of its products with regards to those of pioneer companies.

Keywords : Systems modeling; simulation; multigenerational diffusion; network effects; software firm growth; late entry.

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