Magnetic Strategy of Proprietary Software Vendors: Leveraging Service Market to Compete with Open-Source Software in the AI-Driven Software Arena

Abstract

In the digital economy, the role of the service market is increasingly important. It is the services that not only add value to software products but also drive competitive strategies. For example, artificial intelligence (AI), offers a big arena in the relationship of software and services for the competition between proprietary software (PRS) and open-source software (OSS). This study discusses the role of service market in the competition and how proprietary software vendors (PRVs) tailor its quality strategy under the influence of service market. Specifically, we find that PRVs would adopt the “Magnetic Strategy”, that is, when the quality of OSS is below certain threshold, the quality of PRS and OSS “attract” each other; when the quality of OSS exceeds the threshold, the quality of PRS “repel” that of OSS. Furthermore, we also show that a decreasing service development efficiency would motivate PRVs to improve the quality of PRS.