The behavior of retailers when a vendor folds is very…
““The behavior of retailers when a vendor folds is very revealing. It tells us that they know something the vendors don’t. What they know is this: the price a consumer will pay is effectively capped by the expected future value of vendor service (where “service” is here construed broadly to include enhancements, upgrades, and follow-on projects). In other words, software is largely a service industry operating under the persistent but unfounded delusion that it is a manufacturing industry.””
About This Quote
This interpretation was drafted with AI assistance. It is one reading of the quote, not the author's own explanation.
He argues that software markets behave like services, not manufacturing, with pricing limited by perceived future value.
In simple terms: Software pricing is capped by expected future service value.
Key Takeaway
Understand software as a service.
Themes
business
software economics
service model
Mood
analytical
critical
Type
business
insight
When to use this quote
- product pricing
- strategic planning
- customer retention
Key Concepts
price theory
value perception
vendor dynamics
Questions to Reflect On
- How does perceived future value shape pricing?
- Can service models evolve beyond current expectations?
A Different Perspective
May ignore disruptive innovations that reset expectations.