The target audience for this paper includes information technology (IT) managers who are concerned with completing their software development projects as economically as possible. Deeper economic insight will help them choose between conventional applications and component-based service-oriented architectures (SOAs)--the main focus of this paper. In rapidly changing business scenarios, managers may need to promote SOA in order to reuse their existing legacy applications and achieve a high level of system integration, in order to stay competitive. Deeper economic insight will not only substantiate their technical decisions, but it will also help in preparing better business cases in favor of SOA components.

There are some books on conventional development models that provide valuable information [1,2]. However, not much economic insight is available on the comparatively newer paradigm of building software for SOAs. In this paper, the authors attempt to model some crucial aspects of the component-based SOA market. The objective is to get some usable information regarding the peculiarities of market growth and evolution. The market for SOA-based components is wide open for further exploration, and we need to better understand this market for its peculiarities and complexities.

This paper formulates a simple game to discuss the risks of “delivering one’s application as components without prior negotiation/cooperation with other developers.” The implications of inter-developer cooperation are also added to the analysis in steps. Later the growth and evolution of the components market are considered “through the existence of a repository.” “By varying just a single parameter, the price of reuse,” the authors show four interesting cases on market trends. Critical mass considerations for the market are taken up “by subsidizing component development early on.” As the authors’ experiments show, “[certain types of] subsidies ... not only accelerate market growth, but also reduce the overall expenditure of society on software development.”

This paper also “analyzes the context of a free economy in [the] market, meaning that software developers are able to choose the prices for their components, so as to maximize their individual profits. This scenario is examined under a pay-per-use scheme.” First movers in this market are shown to “enjoy a clear advantage in terms of profitability.”

The authors clearly state that they don’t mean to give any direct advice to practitioners. Most of the cases are academic in nature and may be too simplistic to be applied to real market situations. Furthermore, it may not be possible for managers and decision makers to get to the microscopic levels suggested in this paper. However, the authors successfully highlight some crucial aspects of a new component-based SOA market by simulating many interesting scenarios.