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How New Software Entrants Impact Sales of Incumbent Software in Platform Markets?

In the ever-evolving world of software, new products consistently enter the market. One key question arises: How do these new entrants affect the sales of existing (incumbent) software?

Software : Image Credit to John Schnobrich on Unsplash
Software : Image Credit to John Schnobrich on Unsplash

This blog will explore the direct and indirect impacts of new software entrants on incumbent sales and discuss how specific characteristics of new entrants and incumbents influence the overall effects on sales.



Direct and Indirect Impacts of New Entrants

It is essential to take a comprehensive approach to evaluate new product performance by considering halo and cannibalization effects, as well as the new entrant’s individual revenue.


Managers can use this information to assess the influence of new entrants on a case-by-case basis, taking into account the unique attributes of both new and incumbent products. To stimulate demand, platform growth strategists should encourage the strategic launch of appropriate software types.



In conclusion, gaining a thorough understanding of the direct and indirect consequences of new software entrants on incumbent sales is crucial for both existing players and newcomers. By considering the distinct characteristics of new entrants and incumbents, managers can make well-informed decisions that will benefit not only their own products but also the entire platform.

Thank you ( GB )


 


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