Industrial and Economic Properties of Software

Technology, Processes, and Value



David G. Messerschmitt

Department of Electrical Engineering and Computer Sciences

University of California

Berkeley, California, USA


Clemens Szyperski

Microsoft Research

Redmond, Washington, USA



Software technology and its related activities are examined from an industrial and economic perspective. More specifically, the distinct characteristics of software from the perspective of the end-user, the software engineer, the operational manager, the intellectual property lawyer, the owner, and the economist are identified. The overlaps and relationships among these perspectives are discussed, organized around three primary issues: technology, processes, and value relationships. Examples of the specific issues identified are licensing vs. service provider models, alternative terms and conditions of licensing, distinct roles in the supplier value chain (development, provisioning, operation, and use) and requirements value chain (user needs and requirements), and the relationship of these issues to industrial organization and pricing. The characteristics of software as an economic good and how they differ from material and information goods are emphasized, along with how these characteristics affect commercial relationships and industrial organization. A primary goal of this paper is to stimulate more and better research relevant to the software industry in the economic, business, and legal disciplines.


D.G. Messerschmitt and C. Szyperski, “Industrial and Economic Properties of Software: Technology, Processes, and Value”, University of California at Berkeley Computer Science Division Technical Report UCB//CSD-00-1130, Jan. 18, 2001, and Microsoft Corporation Technical Report ??.

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