Why do some technology companies give their software away for free?

In some cases, software companies even pay other SW/HW companies to include their product:

- Google pays Mozilla for the search box in Firefox
- Yahoo pays Trillian for including the Yahoo toolbar in the installer
- Symantec gives Norton Anti-Virus for free to Microsoft to Package with Windows
- Microsoft includes Internet Explorer with Windows at an opaque cost to customer

The primary reasons for this is to generate Customer Lock-in or Vendor Lock-in.

These Lock-in costs create barriers to market entry for competition.

Customer Lock-in

- makes a customer unable to use another vendor without substantial Switching Costs

- LOSS OF INVESTED LEARNING
- NEW LEARNING EFFORT
- COMPATABILITY

Users resist change irrespective of benefits - They need to maintain the status quo unless sevre problems. Won't change just for additional benefits.

E.g. Though Apple has better OS than Microsoft user resist the re-invested learning and compatability issues associated with switching. If all my colleagues use Microsoft Word and I switch to StarWord I will have inevitable compatability issues.

E.g. Though Firefox is more feature rich, user-friendly and secure than Internet Explorer (IE), IE has greater market share because it is the status quo. There is a cost associated with switching.