cost of such new compatible products often is higher than cost of alternative ones. A
further negative consequence is underuse effect, when not all the features and functions
of the product purchased are actually used by the end user. [3]
In order to promote demand for their products software developers often use
duration of the life cycle (specifically, product support period). Since, the software is
the durable good, developers try to overcome the Coase paradox [4], which implies
following: if consumers on the durable goods market expect seller to apply the strategy
of intertemporal price discrimination, they may abandon the purchase of goods today.
To avoid this, seller (in our case, developers) may periodically introduce new products
in the same product group; then the product released earlier will quickly become
outdated, and consumers are forced to pay a high price again, but for a new product.
Considering duration of software life cycle during procurement procedures is a
logical step when planning the informatization projects for any organization. Thus, the
applicability of this approach for the public sector requires further analysis.
Discussion. The theoretical principles of operation of the software market are
thoroughly studied in the works both foreign (Katz M.L., Shapiro C. [5], Belleflamme
P. [6], Cheng H.K., Sims R.R., Teegen H. [7], Rozanova N.N. [3], Solovyev V.I. [8],
Saltan A.A. [9], Sereda S.A. [10]) and domestic scientists (Yezhova L.F. [11],
Gorbachenko S.A. [ 12] and others). The problems of public procurement in modern
conditions were addressed in the researches prepared by Romanenko E.O., Shchokin
R.G. [13], Zatonatska T.[14], Minyaylo A.I., Kostenko A. [15] and others.
Especiallysoftware procurement issues were analyzed mainly by foreign scholars,
including Mohamed Abbas, Hisham Abu Shama, Gada Kadoda [16] and others.
Problems of life cycle modeling were considered in the works of Semonychev V.K.,
Semonychev E.V., Korobetska A.A. [21], Kozhukhova V.N. [22].
Research result. On the first stage of any software upgrade project an
organization typically faces the problem of selecting a product to replace the old one.
As noted above, the software is a complex durable product so the moment it should be
replaced again depends on the duration of its life cycle. Developers actively exploit
this concept to enhance the demand for their products, since the value of digital product
is maximized only in case when customer could receive technical support and get
updates. As an example, we can cite the behavior of Microsoft, which releases new
versions of its operating system approximately every 3 years, while their period of
support is about 10 years (Table 1). When the official product support ended all
activities aimed at improving product functionality stopped and users no longer receive
updates containing fixes bugs and vulnerabilities.
Effectiveness of this strategy is illustrated by changes of market share of desktop
operating systems on the figure below, where sequential replacement of Windows
versions is visible (Fig. 2).
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