Changing software business: Moving from products to services

Recently, traditional software-product sales and license fees have declined, and product-company revenues have shifted to services such as annual maintenance payments that entitle users to patches, minor upgrades, and often technical support. This shift has been especially pronounced among enterprise-software vendors. Although online-gaming service revenues are growing fast, product sales continue to account for most game-software revenues. Platform companies like Microsoft continue to generate enormous revenues from products. But even Microsoft reported that services accounted for about 3 percent of its fiscal year 2007 revenues; just a few years ago, Microsoft derived all its revenues from product sales.