A Reaction Paper to the Article "Versioning: a Smart Way to Sell Information" by Carl Shapiro and Hal Varian

Topics: Antivirus software, AVG, Goods Pages: 7 (2217 words) Published: May 29, 2011
“Information Technology is changing the way companies operate.” Porter, et al. discussed the value of information and how its acquisition, processing, and transmission brought different dimensions of pricing and cost reduction for buyers and sellers around the world. Because information is valuable, diversity in strategies were employed to outperform one business from another. Incorporating IT is not just one way but the best stratagem, so far.

IT integration offers wider possibilities on how to facilitate information extensively. Much more opportunities arrived when the web, the greatest source for data transfer and possession began its service through internet. The use of internet has transformed the way information is to be manipulated, acquired, and transferred easily from one user to the next. This concept of transfer became the foundation of businesses to invest more on IT aiming on earning using information shift through the so-called versioning.

Versioning is supposed to mean as an upgrade, or a reproduction of an improved copy of product/s. Like books, version or more known as edition defines how valuable a book is judging from reprints it has gone through and the copies sold out from every reprint; and normally the cost of the first edition varies from the value to the strength of requested copies demanded by the public. Digital information versioning however, does not confine to an upgrade only. Because internet has provided several sources of acquiring information, capitalists reengineered the idea of versioning by looking at digital information as valuable goods to sell electronically. The business logic of selling also would not just conform to traditional and manual sides, but also begun pursuing global scale to outrun competitors. This is where strategy comes in.

To strategically sell information goods, you need to determine its economic valuable first. According to Shapiro, et al., there is a distinctive cost structure that first copy is often expensive and subsequent copies become very cheap. We are talking about production costs here – the same perception taken from editions of books also. Because of this, the more information is reproduced, the lower the average of cost production. With the speed of internet aiding the transfer, variable cost of production disappears almost completely.(Shapiro, p 108)

Incorporating business strategy has then changed the interpretation of versioning. The basis of its purpose revolves in the possibilities of revenues that it may bring forth to entrepreneurs selling these goods. Now, versioning has several intentions that feature how important information is being sought through the internet. With the correct pricing, customer’s ability to purchase software and downloadable data in the market is determined and assessed.

Understanding Strategic Risks in Versioning: A Smarter Way to Sell Digital Goods

The objective of versioning is to continuously present an upgrade or development of an earlier adaptation as perceived in the concept of technology innovation which is expounded in the time of its release and use, as presented by International Standard ISO 861. While technology advances, industrialists found a better way of expanding the purpose of versions also.

Versioning becomes the idea of goods marketability in the internet. For example, free version is offered for try outs. Most net users are attracted by freeware. The range of website providers is getting larger to offer such promotions. The logic of free version is to offer a “taste” of the product being sold. These “teasers” are very common in antivirus software which provides just enough of main service of the item. However, they are also a prelude to buying the higher or upgrade version which provides full service of the merchandise at a certain price. Whether a user will purchase the item remains to be seen on how imperative it is for him to...
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