Why IT service providers are not successfull in selling home-grown software products?

Have you ever wondered why pure play IT services companies are a utter failure in selling a home-grown software product to clients? They are good at providing services and sometimes service large product vendors like Oracle and SAPs of the world to create world-class products, but they fail miserably in either creating industry leading IT software products. Even if they have one they are unsuccessful or rather pathetic in making their products successful in the market. Some of the reasons I believe are:

1. They often dont have the R&D budgets to create and sustain the products in the market over long term.
2. They lack the pricing and delivery acumen to run the Product Update and Software support leaving the clients high and dry with poor future release road maps and upgrades
3. They fail to understand that product support is critical as no IT software product can work independently without configuration, but rather a part of the larger ecosystem requiring ongoing support and maintenance.
4. Since Software product licensing and selling is not their core competence it often takes lesser priority both in budgeting and resource allocations in the firm.
5. They look at every new client opportunistically and when they sell their products they also end up selling part of their critical resources (manpower) into services work leading to lack of competent people to providing ongoing support to product development.
6. The incentives and motivations for for sales and delivery of software products are not commensurate with the risks and efforts of the team. Often they see their services counterparts have better incentives and well motivated.
7. It requires commitment, patience and diligence on part of management to make the software product successful, which they often lack. They take the easier and quicker route of generating the same by selling services.

What can a IT services player do to make their software product successful:
1. Hive-off a separate software product Legal entity rather than subordinating it to the larger services organization. With this you also end up having dedicated management that reports independently to board, separate books of finance, separate HR policies, separate budgets and commitments to make it a successful business.
2. Operate the IT software product business as per the norms of the industry rather than that of a services firm. Eg: Professional services arm instead of full fledged services focus, engineering team for product, R&D budgets for future product releases, participation in Software standard bodies to influence the standards, etc.
3. Have the software licensing and support model in line with the IT products industry norms.
4. Have an arms length transaction in sales, delivery and services around the Software product.