Research On The Optimality Of Multi-Period Release Strategy For Software Products

The sustained growth revenue from the software product business is crucial to the development of software industry and the national economy.The sustained growth revenue of one product derives from the multi-period release of the product.Software product is quite different from physical product with regards to many aspects,and the current research on physical product is not adequate for software product.Therefore,we study the policies about multi-period release of software product.Our research work is based on the economic features of software product,and employs the knowledge of economics,management science,systematic science and evolution algorithm.The main contents and contributions of our work are as follow:(1)We discuss the the differences between software product and physical product with regards toeconomic features.And then we review the prior literatures about multi-period release,versioning and new product entry timing.According to the former research,we summarize some issues that remain to be tackled.(2)In a two-period framework,we develop a novel model of word-of-mouth effect relating to the requirements uncertainty.In addition,we propose a new function of willingness to pay(WTP)that is impacted by word-of-mouth effect.We present the total profit function basing on WTP model and customers' self-selection principles.And then we formulate the software provider's determination problem into an optimization model.In this optimization model,the provider needs to decide the optimal quality and price of products in the two periods.We solve the optimization model numerically,and invenstigate the impact of requirements uncertainty on software vendor's determination.(3)In a two-period framework,we propose a piecewise WTP function that takes into account the boundness of customers' requirements.The boundness means that customers' requirements has infimum and supresum.We introduce a parameter that denotes the customers' intolerance to the degradation of software quality.The parameter quantificationally describes the linear relationship between the infimum and supresum of customers' requirements.We consider two schemes:(a)releasing a single version in each period;(b)releasing two versions in each period.For each scheme,we develop a word-of-mouth effect model impacted by the requirements uncertainty.We numerically analyze how the requirements uncertainty and customers' intolerance to quality degradation impact on the optimal qualities and prices of products in each period.The results show that the software provider should introduce a single version in the first period to generate a better word-of-mouth,but two versions in the second period to obtain a higher profit.(4)In a two-period framework,we develop a noval WTP function that corporates the customers' foresight on software depreciation.In the WTP function,we introduce a software depreciation speed parameter to quantify the customers' foresight.Moreover,we present a function describing the performance of the softwar firm's work on requirements analysis.The performance of requirements analysis relates to the customers' requirements uncertainty and impacts customers' WTP.According to customers' self-selection princeples,we formulate the software provider's decision problem as an optimization model that takes requirements ucertainty and customers' foresight as its parameter.The software provider needs to determine the optimality of the second-period product entry timing and the prices in each period.We solve the optimization model numerically,and then we analyze the impact of requirements uncertainty and software depreciation speed on the optimality of software launching timing and prices.