Earlier research closest to our model is the work on dynamic competitive adoption of technologies with network externalities (Katz & Shapiro, 1986). That paper considered a two period setting with two technologies, in which the old technology has a first period marginal production-cost advantage, while the new technology has a second period marginal production-cost advantage. The main goal of the paper was to analyze how technology sponsorship matters. We modify and extent that framework to analyze dynamic competitive adoption in the software industry.