Recently I was asked this question and tried to really find some right definition on the web but I reached no where. Please help me in getting an answer to this.

The best answer I know today is Product is a software that you sell and no customization while Service is built to be sold with customizations as per the requirements. Just like a MS Office Software is a product and SAP is a service.

I will really appreciate your comments!

HERE IS THE OUTCOME OF THE DISCUSSION:

http://www.linkedin.com/answers/technology/software-development/TCH_SFT/710030-7689406

discuss-rohit-prabhakar