This paper models a firm's level of effort in mobile software application production as an optimal control problem to maximize market share and profit in a digital marketplace. Through a rumor-spreading system dynamic, a digital goods vendor can capture market share by focusing efforts on software quality, which is costly. We first derive theoretical results expressing market share, the state variable, in terms of effort put towards quality, the control variable. We then usenumerical examples to illustrate optimal control paths for vendors facing various market conditions. Our results on effort towards quality are consistent with software evolution theory and show that focus on quality always declines over a product's life cycle. On the other hand, our findings on market share indicate that initial market conditions dictate the optimal path to pursue and affect final market share .
We use a control framework to analyze the digital vendor's profit maximization problem. The vendor captures market share by focusing costly effort on post-launch product maintenance, which influences user perception of the product and drives a revenue stream associated with product use. Our theoretical results show necessary and sufficient conditions for product maintenance to decline over a product's life-cycle, thus showing conditions when Lehman's 7th law of software evolution holds. We also numerically illustrate control paths under different market conditions .
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This paper models a firm's level of effort in mobile software application production as an optimal control problem to maximize market share and profit in a digital marketplace. Through a rumor-spreading system dynamic, a digital goods vendor can capture
We use a control framework to analyze the digital vendor's profit maximization problem. The vendor captures
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efforts on software quality, which is costly. We first derive theoretical results expressing market share, the state variable, in terms of effort put towards quality, the control variable. We then usenumerical examples to illustrate optimal control paths for vendors facing various market conditions. Our results on effort towards quality are consistent with software evolution theory and show that focus on quality always declines
costly effort on post-launch product maintenance, which influences user perception of the product and drives a revenue stream associated with product use. Our theoretical results show necessary and sufficient conditions for product maintenance to decline
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life cycle. On the other hand, our findings on market share indicate that initial market conditions dictate the optimal path to pursue and affect final market share
life-cycle, thus showing conditions when Lehman's 7th law of software evolution holds. We also numerically illustrate control paths under different market conditions