There aren’t always new customers to sell to. When your system requires on constant growth to not collapse, it isn’t sustainable. A Ponzi scheme is the closest way I can describe it but I wouldn’t say it’s fraud since you weren’t promised future updates. You just implicitly require and expect them.
I really don't see how there's any difference between software and physical products.
Businesses are working year-round — manufacturers are manufacturing new products, software developers are writing software updates — and also selling year-round. If you run out of customers, that's of course a problem, but that's not a unique problem to software.
As a software developer, I sell new copies year-round, every day, and also release updates year-round. If I run out of new customers I'll let you know, but last month was actually my best sales month ever.
What do you mean exactly by "constant growth"? You need constant sales, yes. You don't necessarily need a constant increase in sales, if sales are at a sustainable level.
