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Agile development methods such as extreme programming (XP), SCRUM, Lean Software Development (Lean SD) and others have gained much popularity during the last years. Agile methodologies promise faster time‐to‐market, satisfied customers and high quality software. While these prospects are appealing, the suitability of agile practices to different domains and business contexts still remains unclear. In this article we investigate the applicability of agile principles in the context of market‐driven software product development (MDPD), focusing on pre‐project activities. This article presents results of a comparison between typical properties of agile methods to the needs of MDPD, as well as findings of a case study conducted at Ericsson, an early adopter of agile product development. The results show misalignment between the agile principles and needs of pre‐project activities in market‐driven development …