Software piracy and bundling in the cloud-based software era

Xiong ZHANG, Wei T. YUE, Wan Yee Wendy HUI

Research output: Journal PublicationsJournal Article (refereed)

Abstract

Purpose
In the cloud computing era, three merging developments in software industry are: cloud and on-premises software may offer complementary value to each other; cloud software service requires the support of significant information technology infrastructure; and software piracy problems can be better managed in the cloud. However, how these developments together impact a vendor’s bundling strategy has not yet been investigated. The paper aims to discuss this issue.

Design/methodology/approach
Drawing on the product bundling framework, this research establishes stylized models to study a software vendor’s bundling decision in the cloud-based era with special consideration on the issue of software piracy.

Findings
The authors find different key parameters associated with the cloud era exert different effects on the bundling decision. When on-premises software and cloud software generate additional value by complementing each other, software vendors can make greater profits under the pure components (PC) strategy. Regarding a low infrastructure cost, software vendors should favor pure bundling (PB). The impact of piracy deterrence effectiveness is less straightforward – it favors PC when piracy deterrence effectiveness is low, but PB when piracy deterrence effectiveness is high.

Originality/value
This study makes key contributions to theory and practice. First, this is the first study to examine software bundling strategies in the cloud computing era, whereby the three factors relevant to the cloud phenomenon have been considered. Second, this paper contributes to the literature of bundling and software piracy by examining the intersection of these two streams of literature. Third, this paper sheds light on a vendor’s bundling decision when facing piracy problems in the emerging cloud software era.
Original languageEnglish
Pages (from-to)1085-1122
Number of pages38
JournalInformation Technology and People
Volume32
Issue number4
Early online date15 Feb 2019
DOIs
Publication statusPublished - 5 Aug 2019

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Bibliographical note

This work was partially supported by grants from National Natural Science Foundation of China (Grant 71801014), Beijing Social Science Foundation (Grant 17GLC069), the Research Grants Council of the Hong Kong Special Administrative Region, China (Project No. CityU 195913).

Keywords

  • Decision making
  • IT service

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