The Classic Product Lifecycle Curve looks something like this. The initial rise on the curve is the portion representing early adoption in the market. This is the time traditionally reserved for proof of concept testing and final development with a stable feature set that meets the needs of the majority of the user community.
The flat portion of the curve represents product maturity and acceptance in the marketplace. This is the place where the engineering feature set is typically frozen and the product is stable. Most of the sunk engineering costs are in the product and total revenue is at its highest. This is the time when the company achieves a sustained, recurring revenue stream and realizes profits and return on investment into the original product.
The falling portion of the curve represents the products end of life. Sustaining engineering generally is taking place, with revenue and profits declining until the product reaches end of life or can no longer profitably be sustained.
The curve that has been emerging over the last ten years looks more like this. Product introductions are rapid due to shorter development cycles and increased competition.
Product maturity is much shorter due to increased competition. Couple this with the introduction of OSS and the idea of “loose application coupling” rather than “tight integration” and you are left with a situation which makes it very easy for users to switch or change. The ability of vendors to continue the practice of “proprietary lock in” is eroding.
This of course makes profits very elusive and further forces the company into a situation where they can probably not afford to sustain the product to end of life because they never achieved the revenue or profits from the product in the first place. The product has less total users and a much longer sustaining requirement.
So how are companies dealing with this problem?