Assessing the relationship between the user-based market share and unit sales-based market share for pirated software brands in competitive markets

Abstract

This article argues that in a competitive software market, in the presence of differential piracy and brand switching among the various brands within a software product category (e.g., spreadsheets), there may be no relationship between market estimates based on unit sales and the user base of a software brand (e.g., Lotus 1-2-3). Hence, marketing strategies developed for the software brand based on unit sales-based market share may be misleading. To support our argument and to quantify the relationship between unit sales-based market share and the user-based market share, we first extend a diffusion modeling approach for pirated software product categories to model the legal and illegal adoption dynamics of a software brand within a software product category. Second, to examine empirically the relationship between the user-based market share and the unit sales-based market share for a brand, we consider the diffusion of the major brands of two types of software product categories, spreadsheets and word processors, in the United Kingdom. Results indicate that in the product category of spreadsheets, for Lotus 1-2-3, the user-based market share was always less than the unit sales-based market share. On the other hand, in the product category of word processing software, the user-based market share for WordPerfect was always greater than the unit sales-based market share. Marketing implications of these results for Lotus spreadsheets, Novell WordPerfect, and the software industry are discussed.