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Software piracy and bundling in the cloud-based software era

Xiong Zhang (Department of Information Management, Beijing Jiao Tong University, Beijing, China)
Wei T. Yue (Department of Information Systems, City University of Hong Kong, Hong Kong)
Wendy Hui (Department of Computing and Decision Sciences, Lingnan University, Hong Kong)

Information Technology & People

ISSN: 0959-3845

Article publication date: 20 February 2019

Issue publication date: 23 September 2019

Abstract

Purpose

In the cloud computing era, three merging developments in software industry are: cloud and on-premises software may offer complementary value to each other; cloud software service requires the support of significant information technology infrastructure; and software piracy problems can be better managed in the cloud. However, how these developments together impact a vendor’s bundling strategy has not yet been investigated. The paper aims to discuss this issue.

Design/methodology/approach

Drawing on the product bundling framework, this research establishes stylized models to study a software vendor’s bundling decision in the cloud-based era with special consideration on the issue of software piracy.

Findings

The authors find different key parameters associated with the cloud era exert different effects on the bundling decision. When on-premises software and cloud software generate additional value by complementing each other, software vendors can make greater profits under the pure components (PC) strategy. Regarding a low infrastructure cost, software vendors should favor pure bundling (PB). The impact of piracy deterrence effectiveness is less straightforward – it favors PC when piracy deterrence effectiveness is low, but PB when piracy deterrence effectiveness is high.

Originality/value

This study makes key contributions to theory and practice. First, this is the first study to examine software bundling strategies in the cloud computing era, whereby the three factors relevant to the cloud phenomenon have been considered. Second, this paper contributes to the literature of bundling and software piracy by examining the intersection of these two streams of literature. Third, this paper sheds light on a vendor’s bundling decision when facing piracy problems in the emerging cloud software era.

Keywords

Acknowledgements

This work was partially supported by grants from National Natural Science Foundation of China (Grant 71801014), Beijing Social Science Foundation (Grant 17GLC069), the Research Grants Council of the Hong Kong Special Administrative Region, China (Project No. CityU 195913).

Citation

Zhang, X., Yue, W.T. and Hui, W. (2019), "Software piracy and bundling in the cloud-based software era", Information Technology & People, Vol. 32 No. 4, pp. 1085-1122. https://doi.org/10.1108/ITP-05-2018-0210

Publisher

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Emerald Publishing Limited

Copyright © 2019, Emerald Publishing Limited