David,
You make some good points. Do you see software for most uses approaching a
sort of "commodity" state where "it just works" and there's no real incentive
for users to upgrade? When you look at the vast majority of applications that
most people actually use, such as email, web-browsers, and word processors,
there's really not a lot more that can be done. It seems to me that the
biggest threat to proprietary software developers is that they can only
sharpen the knife so much before users just don't care anymore. Version 19.7
of "Knife" might be 3% sharper than Version 19.6 of "Knife," but most users
aren't going to care and they're not going to be interested in forking (no pun
intended) over more money for a new tool that offers very minimal (if any)
advantages over their previous tool.
We've already pretty much reached the point of "commodity" hardware. Do I
really care that there's a 8000.74THz Pentium 64 available, when my Pentium II
350MHz system does everything I need just fine?
My point is, I don't think that the software or hardware industry can possibly
support in the future the incredible growth (and high salaries) that have been
present in the past.
Microsoft realizes this, and that's why they're desperately trying to move
people over to a subscription model for their software. If they can charge
you just like the utility company charges you, then they can ensure a healthy
revenue stream for their future. But is the customer really gaining anything
over the old model? No. I'm almost positive that whatever "upgrades" occur
will be minimal. Once Microsoft has you hooked on the subscription service
for Office or Windows or whatever, they won't even need software developers
anymore. :-) You basically pay over and over again to use their product, but
it's essentially the same product that had reached a certain level of
functional maturity years ago.
~M
Quoting "David P. Schwartz" <
davids@desertigloo.com>:
> Every product you buy, whether it be at the grocery store, the
> department store, wherever, has a portion of it's price going to the
> retailer, a portion going to the distributor(s), and a portion going to
> the manufacturer. Some of the amount paid to the mfgr is for
> "intellectual property". Nothing you purchase in a store costs even 5%
> of what you pay in terms of its raw goods
> costs. I don't get the issue people have around paying for software.
>
> The only way companies can really make a profit is by gaining leverage
> on their costs of goods plus costs of manufacturing. An average
> employee who's paid $10/hr in a mfgr job is part of a larger equation
> whereby the company is earning between 100 and 1000 times that.
>
> The stuff inside a box of cereal costs less than the package, yet people
> seem happy to pay nearly $5/box for cereal these days. A floppy disk
> and CD cost more to manufacture than the entire box of cereal. Some
> people argue that the major difference is that cereal is consumable,
> whereas software is not. I guess the same argument can be made about
> cars, that they're consumable.
> So you don't mind paying $20k for a car that costs less than 20% of that
> in raw cost of goods.
>
> If you measured the "consumption rate" of software by the number of
> times you used software, then maybe $5/use would satisfy you for most
> needs -- but would you pay that for your email service?
>
> We are able to earn as much as we do as software developers because
> there is a far greater demand for our services than supply, and because
> the results of our labors are HIGHLY leveraged by the people who pay us.
> If a company isn't earning 10x what they're paying us for our time,
> they're not being very smart. If the results of our work were priced
> like cereal, then we'd be
> earning $10/hr, and the company would be earning 1000x our pay off our
> efforts and we wouldn't be having this discussion about "selling
> software" because it would be designed to be consumable, like cereal,
> and sell for $5 per use.
>
> -David
>
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