0 + 0 = 1 : the appliance model of selling software bundled with hardware

The business model of selling software bundled with hardware is called the appliance model. As hardware becomes less and less expensive and open source software is being offered for free, the traditional business model of selling packaged software is being threatened. This disruption in the software industry is forcing software vendors to consider other business models such as advertising-based, transaction-based, software-as-a-service or appliance-based models in order to create additional value for customers. Most of these models have existed in variants for decades but are now gaining in popularity due to factors such as changing cost structures or the Internet as a delivery channel. This thesis analyzes the economic drivers and barriers for the appliance model for both the consumer and enterprise software industry segments. Important drivers of the appliance model for both of these sectors are hardware commoditization, open source software and vertical integration in order to capture margins. In the enterprise software segment the complexity of traditional software integration and operation including unpredictability of total cost of ownership, rising IT personnel cost and maintenance fees are driving the adoption of the appliance model.

Department dc:contributor.department

Management of Technology Program.

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2007

Author dc:creator

• Hein, Bettina

Advisor dc:contributor.advisor

• Michael A. Cusumano.

• Management of Technology Program.

Statement dc:rights

• M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission.

Licence dc:rights.uri

• http://dspace.mit.edu/handle/1721.1/7582

Language dc:language.iso

eng

Handle dc:identifier.uri

http://hdl.handle.net/1721.1/39504

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/39504