try perform internal software development activities. A major share of the total personnel is working in the secondary software industry, i.e., in vertical enterprises. In this phase, employees' knowledge on the vertical industry processes and practises as well as knowledge on the technology particular to the industry are stressed. In the second phase of the vertical software market evolution, the competing vertical enterprises increase their software development effort and seek to copy the best practises from the others. The market leader is likely to continue its internal software development, whereas the competitors may join forces to outsource their development activities, typically to software service providers. In this productiza- tion and standardization phase, the vertical enterprises may also standardize a common technology platform or interfaces and, therefore, enable software vendors to manufacture software products cost efficiently. Also in this phase, developing software requires knowledge on processes and interface specific to the industry, although there are likely to be several different and competing micro ecologies. In this phase, software vendors which are bought typically possess the required specialized knowledge. In the third phase, that of adoption and transition, a major increase in outsourcing of the software development activity occurs, which leads to growth of the primary Analyzing the Current Phase of the OSS/BSS Software Market Phase 1 Phase 2 Phase 3 Phase 4 Share of secondary software industry Share of Share of software products Share of primary software software industry services Share of secondary software industry Phase 1 Phase 2 Phase 3 Phase 4 Knowledge on vertical Knowledge on Cutting costs industry processes software products Knowledge on technology Capacity and New growth and interfaces customer equity (i.e. market share) Cross-selling Fig. 5 The evolution of the software market (chapter, "Model for Evolution of a Vertical Software Industry") and the rationale for mergers an