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Software Companies - Merge or Die?
pillageplunder writes "This article in Businessweek points out that large software companies like Siebel, BMC and Veritas are all warning that 2nd quarter results would be lower, and predicts a shakeout. According to the article, 'Investment bankers say half of the sector's 600 publicly traded companies are likely to be eliminated.' Ouch!"
Now less companies will be offering software jobs to non-Indians. This is great news.
Oh...wait....
It is more than just BSD who is dying!
Learning HOW to think is more important than learning WHAT to think.
This interweb thing was fun while it lasted.
Salut!
Could Microsoft please be one of those that dies?
...Please?
George Bush said the economy is recovering...
...I thought it already burst.
:D
Well there goes my retirement! Oh well, they say the minute you stop working, you are on the fast lane to fertilizer
Once that happens, won't that mean about 75% of publicly traded companies will be gone since the dot com bust? A second round, I guess.
I hope the company I work for never goes public. I'd rather stay small and slightly profitable than get a whole bunch of money and blow it.
This will help weed out some of the 'less skilled programmers'
Since stock analysts are the guys who really run the show with publicly traded companies, one has to wonder why anyone listens to them when it comes to software anymore?
Seastead this.
in mature industries you can count members with the fingers of your hands
I've got guns, I've got ammo. Unless the neo-con junta is thrown out this fall, it's time for a revolution.
At least we're keeping Pud busy... ;)
std::disclaimer<std::legalese> sig=new std::disclaimer; sig->dump(); delete sig;
Without competition software will just get worse, with no need to improve.
Large companies have a tendency to acquire smaller companies and keep them as a separate department, but they inevitably get phased out over time and absorbed into the larger entity. How many people really want to deal with the software giants past a point?
I am a programmer for a medium sized private company. We have recenlty had 3 of our 12 IT staff leave in the past 2 years. Problem is, we have not replaced them. Even though we are not a "software" company, our IT staff seems to be on a downward spiral. I doubt we will be bought out, however, it worries me that our owners are all in there SIXTIES! I am taking realestate classes in the fall, to try and get into some part-time appraisal position. Good luck to the rest of you that stick it out. I still got a couple years in IT, but whos to say anymore!
Rocco
Why don't companys just change their values instead of trying to screw people? There was an article about bad customers on slashdot earlier and I think a bigger problem is poor treatment of customers. Seriously look at all the marketing where there are large rebates instead of just marking the product down to a more reasonable rate. All the rebates done hoping the people won't be able to collect on them later. This isn't exactly friendly business. Large companies who's values are supposed to be integrity and people are firing their workers and trying to cut every corner just to raise their own stock options. Wouldn't it be better business to make better products and hire people from the countries that you are selling to instead of making products that break and sending your money to other countries. Aren't large companies in effect draining the economy that they are trying to tap with their current business plans? I think business should just try to do a few things to improve their products. 1)Make things right the first time. I can't tell you how many companies I've stopped buying from cause their products are flawed. 2) Value people. Give friendly customer support and stop trying to give every excuse in the book not to work. If you offer a warrenty you should honor it for everyone and not just big business.
Its going to be ugly in software. 75% of firms are on borrowed time.
Open-source is the Japanese motorcycle industry. At the moment, we're about where motorcycles were in the late 1970s - they're pretty good, and they work and work well. But we haven't reached the Honda CG125 (a million pizza-delivery boys can't be wrong), or the mighty mighty Fireblade, yet...
Funny that Veritas would be one of those mentioned. Their software is overly cumbersome, they have a poor selection of information online, the cost of support has increased every year. Unfortunately, there isn't much in the way of competition- they have a lot of features that nobody else offers.
I keep forgetting my place. Jesus is for losers. Why do I still play to the crowd?
Blame all than open source/free software out there.
If a software company want to survive, it must try with a different business model. Maybe based on service/support and not just licences.
-- When did Ignorance Become a Point of View?
Must be all that software piracy that's keeping software companies down. We need to listen to the advice of the BSA and legislate piracy out of business.
I am astounded at how much Veritas has been able to charge for non-monopoly, well-understood products for which stable and robust free alternatives contnue to exist.
I would guess kickbacks if it wasn't so widespread.
I am suprised that most have lasted as long as they have considering most software anymore is bloated, unintuitive, bug ridden crap.
Emptied the clip, dammit.
Don't ever make your company public. Once you do, it stops being a company and instead a money-collector. Instead of a commercial entity which produces (hopefully) a superior product, you are controlled by people who more than likely don't give a rat's ass about what is made, unless it's money. This is the problem, they don't care how the money is made, so they'll press for cutting corners at every opportunity, and make a prime target for "mergers". Mergers are just an excuse to cut even more corners, by taking advantage of economy of scale. However, once one player in the field does this, the others must follow or be eaten up. Thus is perpetuates until we reach a number of large companies which are too large and bloated to react to demand and conditions, and fudge the books, or stifle innovation in order to keep what rightfully should be a corpse alive. True innovation will always be carried out by dedicated individuals or small groups, possibly in a private company, but these large ones are just disasters waiting to happen.
I really have a tough time relating to an article that has to explain that IT is an accronym for info-tech. Stupid analysts are just guessing anyway, half of software companies being gobbled up seems a bit overstated.
in bed.
You don't need hundreds of companies to sustain competition. A handful of good companies competing for the same customers will do fine. Most industries are like this. Cars, electronics, game consoles, computer manufacturers, etc. The good companies will stay afloat because they produce quality products and/or have good management. The software engineers from these failing companies will have to go somewhere. The good ones can go to a larger company and prosper and the ones that aren't good can find another career. This is just a small shakedown in the grand scheme of the industry, but it could help. I'd rather see just a few companies compete. Look how well that's turned out between KDE and Gnome and Microsoft, or OpenOffice (Sun) and Microsoft, or Mozilla and Microsoft. I could go on (and on with microsoft) but you get the idea. Besides, larger companies have the muscle to initiate standards which is what computing boils down to regulate and ensure competition.
As long as there are several companies, competition can flurish.
We just threw their "Patrol" Unix system agent out, replacing it with a lightweight SNMP agent. Their agent is 4 binaries, from 4 separate product lines, with different life cycles, and no cross-compatibility testing.
I hope they die a screaming, flaming death.
I want to delete my account but Slashdot doesn't allow it.
In general large software companies are, for lack of a better word evil. They produce inferior products at criminally high prices, industry rates for ASP development are still at $200 - $300 / hr, MS spends 300k per year per employee. The developers are certainly not getting most of this money and the clients certainly not getting good work or code for these horrendous rates. The large software companies produce the poor products and rely on slick marketing to the sell their products to ill technically informed clients/managers. These companies seems to use the strategy of charge the client as much as possible, pay the developers as little as possible, both client and developer get screwed, managemeent gets rich for nothing. I think its a good thing many of these companies are going away, its just their scam is over. Its not that people don't need software, its that the're tired of getting ripped off for it. I believe that these companies are just being replaced or put out of business by small companies and individual developers working directly for non-tech clients. Its the big US companies that have been the most enthusiastic about replacing US workers with H1-B's outsourcing etc, small companies tend to use better quality, long term local talent. Anyhow this seems like the trend I've seen. Due the large availibilty of developers, cheap bandwidth, cheap hardware, and free development tools/platforms, its seems like the large companies are going to have ahard time, but I think this will be better in the long run for both developers and clients/users. M
It's an interesting comparison between Japanese innovation and quality control in motorcycles and open source in software but aren't you missing one huge disconnect? The Japanese approached innovation with a single-minded, extremely rigourous and well thought out approach to making quality affordable. Linux currently has no focus, no rigour and isn't well thought out. Where the Japanese found the set of qualities that made their products universally accepted, Linux is busy finding the qualities that make it accepted for infinite variety. The two examples might end up with the same market results but it won't be through the same process. In fact, the first Linux company that acts like the Japanese will likely have more success than all the other OS developers together.
The barriers to producing software are very low; a single person can do it (not something like an office suite, but something simpler). The don't need a huge factory floor, etc. Besides, software is often a service, not a product.
A more appropriate example might be restaurants. Sure, you've got the big conglomerates like McDonalds, Pepsi/Pizza Hut/KFC/Taco Bell, but then you've got mid-sized chains like AppleBees, small chains with 10 restaurants in a city, and then single family places who run a restaurant on the ground floor and live above it.
If you want a quick cheap meal like you've had 1000 times before, you may go to McDonalds. If you want something out of the main stream with wine and personal service, you may go to the Italian bistro down the street.
It's the same with software. If you want an office suite, go to MS. If you want payroll software, SAP or PeopleSoft. If you want someone to design a web application for you, you'd be crazy to go to a large company, even if they *would* take your business. Go find a local shop and pay them.
Maybe some take it a bit hard, but the days you can "type yourself to a fortune" are aparently gone. Since supporting hardware is about the only purpose of any software, it should be completely open. (as well as the hardware) People want something to show and a new gadget is just the thing.
From my perspective: "Software is a necessary evil". Even if the software costs 10x more to develop, people buy the hardware and the software is "free". It works for me and presumably this is also the prevailing opinion.
If you have a great new gadget, isn't it really stupid not to open the source and allow it to work on any platform? Its sickening how many pieces of Windows software need to be reverse-engineered to have a reliable product. These companies are shooting themselves in the foot. Software is a part of hardware and belongs within the hardware relm. If everyone can see your source code, many, many more will buy your gadget.
The days of software without hardware are essentially gone. You can copy software with no effort. It takes special knowledge and allot of experience to copy hardware. Therefore its very safe to allow both to be open. There are a few areas where custom software is the solution. In most cases the solutions will come from individual programmers or small companies. The big corporate days are over! Thank God.
My old company (a hardware company) just sold off its software division to another software company. Bottom line is that nobody was/is buying, and the budgets for multi-million software deals just aren't materializing.
For the past 4 years companies have been forced to tighten/halt their IT spending, and they may still be saying "if we could last the last 4 years with our current software, perhaps we can last a few more..."
"The market alone cannot provide sufficient constraints on corporation's penchant to cause harm." -- Joel Bakan
... is reborn Faith in the ability of Billy Boy to Feed us All. Unfounded of course. But then everyone will upgrade to Longwait and things will be worse than ever, and all the cottage industries will be rejuvenated: A/V firms, PFW firms, new IDS systems, maybe even a browser that has tabs and denies popups or a plain text email client, spyware eliminators, hacker tools like Visual nmap - and of course more and more BASIC programs straight from the Borg.
Bad software means good business.
Low level innovations of the past, such as RDBMS and networking, are also not beng replaced by newer innovations (I don't think technologies such as Neural Nets are fully realised but I think they never will be).
These two levels of innovation are what I think drove the IT industry in the past - until some new things come along (and I don't think anything will in the next 20 years) major IT companies will always be outside the high-profit zone.
B.S to you. Linux needs to improve. Check its market penetration.
Here's an idea.... INNOVATE or die. Companies merging is not part of the capitolistic system. The idea is that you produce good enough products that enough people will pay to get them. Merging is just the corporate pyramid scheme.
Just as Time Warner how great their merger with AOL worked out...
Slashdot gets worse every day... Pipedot: News for nerds, without the corporate slant
Seems logical.
After all, if people have purchased the software and it keeps running, why buy anything more? If it runs well enough, why not just buy support when you need it instead of with an indefinitely long contract?
You can say that if the software company's product quality is sufficiently low that future returns will be guaranteed. But that's only true if there are no competitors with a higher quality equivalent (and, yes, you'll notice profitably comfortable footdragging going on in certain market segments).
Mostly you have to constantly increase quality, increase features, decrease the price and decrease bugs. Ultimately, you'll have created a product that's so close to perfect that people will be happy to sit with it and not "upgrade". That is, you better find a different line of business than coming out with Product++.
"Provided by the management for your protection."
If I had a neighbour who's obviously alcoholic (8 vodkas, wtf?) and then goes about shooting wildly on his backyard, I'd call the cops and ask them to take the lunatic away.
You decide to go with the smaller company that gets bought out DURING your implementation of said software :(
DOH!
Sometimes you just cant win anymore.
Massachusetts is as close to a socialist State (well, actually they're a commonwealth) as it is possible in the USA, so they're bound to go over the limits set by the Constitution and common sense.
the business owners are stockholders who are 100 levels removed from actual customers. You expect them to care about anything but money?
The problem is not with the companies themselves, but with not holding at least the majority shareholders accountable for the actions of the company even if they're not Enron-level evil.
Software will be the same. There may be a thousand websites, but they will all use Apache and MySQL.
If you're selling stuff to casemodders and gamers, hardware is a great business to be in, but in business... except for a few areas like the art department... it's impossible to buy a computer that isn't much much faster than you really need. I've got a 2.something GHz PC in my desk, and all I run on it locally is a browser, Lotus Notes, a word processor, and source code editors. All the shiny new hardware is back in the dinosaur pen... oh, they're smaller and faster dinosaurs, but from the point of view of the user or the developer it's not that far from writing SQL to run on a mainframe to display data on a 3270 and writing SQL to run on a webserver to display data on a web browser.
And nobody sees the shiny new hardware in the dinosaur pen, it's just there. You'll be able to sell people desktop upgrades for a while yet, but pretty soon the days of coming up with new bloated software to force hardware sales will be over.
So, from my perspective, "hardware is a necessary evil". New hardware means new platforms to support, new incompatible sets of drivers to deal with. Even if the hardware's cheaper upgrading costs enough you might was well stick with the hardware you already have that's paid off... it's "free". And this is increasingly becoming the prevailing opinion... our desktop replacement rate is way down.
The days when hardware was exciting are essentially gone. One computer is much like another, back in the server room, and one PC on the desktop is pretty much like another... even if it's faster, it's hard to tell because the newtork and the server are the real bottlenecks. The only reason people around here care much about PC upgrades these days is they're handing out nice flat panel displays when you get a new PC.
Some of us still appreciate user friendliness and real support.
Syphon All Profits.
:)
To be perfectly honest, this isn't very shocking. 80% of all new businesses within the United States fail within their first year. The fact that many smaller software corporations stuck around was mostly a result of the dot com effect. Now that the cash kitties are finally drying up, any lag that perpetuating the existence of the Small Business is a memory.
While this means layoffs in the short term, I'm not convinced the consolidation is a bad thing. People scream that large software corporations tend to be heartless... and to some extent that's true. However, name small corporations that compete with the stock/options and health benefits corporations like Microsoft provide for their employees.
There's a stigma in our society that all consolidation leads to monopoly - not true. In the late '90s and early on in this century, bank consolidation has actually afforded people greater security, redundancy in systems and access, and better financial services as a result of greater infrastructure. While software corporations aren't like ATMs in the mobility and transparancy of operations, larger corporations might fair better.
In any event, regulation of software corporations, and promotion of worker benefits will be at a premium.
In other words, there's nothing to fear.
Large companies who's values are supposed to be integrity and people are firing their workers and trying to cut every corner just to raise their own stock options.
That's the problem with publicly traded companies. They've become practically forced to keep their stock prices up no matter what, and that usually means to fucking everyone: employees, and customers for the gains of their stock and executives. Course on the flip side you have the greedy buisness owner who screws everyone for his own benefit.
Not to sound too cynical, but I think it's more the fault of everyone being a greedy asshole nowdays =P
But, there is plenty of other software for niche markets where a proprietary company can still make an impact. The realm of OSS is expanding all the time, but they're not filling the niche markets yet, at least not completely. Also, you miss the fact that a lot (maybe most) software is written for a client, not written and then sold to a client.
BMC recently bought Remedy. Remedy ARS is a helpdesk package. It might work ok for a small windows only shop, but it totally sucks for us.
The multi-platform support comes through a horrid mixture of mangled HTML, javascript, and java applets -- ALL ON THE SAME PAGE!! It doesn't work right on netscape/mozilla browsers. They browser sniff and send different code based on your user agent so bugs can't be reproduced between myself (on linux) and users (on windows).
Their main website (www.remedy.com) is a trojan horse. It looks good, but the "supportweb" site is severly confusing and broken. Document searches go to these strange java applet embedded tables that forward you on to PDF files. (and I don't mind PDFs)
We can't even download product updates if we're not using a windows or solaris desktop. This is because updates are not directly available. You have to download a downloader applet that will perform the (HTTP-based) download for you!
DIE REMEDY DIE!
Isn't that why you went in the business anyway? If you didn't, I quite frankly don't understand you.
You start a business to make a profit, not to save the world or serve the poor.
Just not for these companies!
Which is a good thing as far as I'm concerned. Some of these companies I have had expierence with, and I would be happy to make a generalization that any product that cost more than $1M requires so much customization that there's about a 50% you can make it work at all - and you are going to cough up a fortune to even try. The very death of companies like these will probably lead to healthier use of capital in companies that actually do something.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
Its that simple. As long as workers can be fired and treated like shit, companies should simply die when they run out of money. They failed.
But they'll all have "Buy" ratings until the day they file bankruptcy....
Sorry, but the self-destruction of the software industry has almost nothing to do with presidential politics. It is largely the result of the life cycle of the industry itself.
/.ers routinely deride this concept.
Most of the big software companies existed because their was a perception that the companies were building up equity in intellectual properties.
As OSS is set against the corporate (capitalist) software industry, it seems that threads like this should be entirely about celebration...and the big question should be about how to coerce failing software firms into liberating their source code into the public domain as they close their ledgers and dispense any remaining funds to shareholders.
The real problem is not that software companies will continue to fail, but that they are leaving large numbers of customers with closed systems and no support.
Please, don't misunderstand, bashing Bush for any negative news is desirable. But, I really can't see how Bush is responsible for the natural life cycle of an industry. It also seems strange to be blaming someone for the failure of a business model that OSS opposes.
I agree that it is wise to blame one's enemies for the necessary outcome of one's actions. I certainly don't want to be blamed for follow programmers losing the livelihood, but isn't the fall of corporate giant software firms the goal of a free software movement?
The failing businesses were all founded on that strange IP model that OSS rejects. The failing companies were built on the assumption that they were building an abstract thing called IP, and that they were re-investing this IP to create more IP.
Bush and his cronies were in the lead in trying to defend this IP.
It seems strange to blame Bush for not succeeding in stopping the outcome of what we desired to happen....the fall of corporate owned software. It seems to me that if you are against IP, then this article should be a cause for celebration.
"Prove you're sane" sounds just like "Prove you'll toe the party line".
If you can't see this, you're blind.
...these "investment" bankers are the same toads which suggested Timer-Warner merge with AOL and the many other content & distribution companies which are all now being sold off in pieces (i.e. DE-merged).
As such, I hope these software companies ignore this "advice". These bankers are proven investment moron in it for themselves and their greedy friends.
The only benifit to this might be we'll be able to see some more perp walks on CNN.
Rich...
Now, picture a capitalist system with no mergers or splits. Companies evolve purely through "mutation," by making incremental changes to their business strategies and product lines. This is analogous to a asexual biological reproduction, like we see in bacteria. A growing company is like a growing colony of bacteria, where the total mass of the colony increases, but genetic modification takes place at a slow pace, if at all.
Now, picture another system which allows mergers and splits. This is much more analogous to sexual reproduction, where two different individuals combine their genetic information. Two merging companies can bring together a wide range of business strategies and product lines, sometimes resulting in a stronger company, sometimes in a weaker one. But clearly, there is much more potential for large-scale, and sudden, variations in "genetic" traits.
Now, notice that, on Earth, the highest forms of life all reproduce sexually. Clearly there is a distinct advantage in sexual recombination over pure asexual reproduction relying only on mutation for evolution.
The analogy is very rough, and people can probably point out at least a few serious flaws, but I don't think it's unreasonable to claim, based on this analogy, that a system of capitalism that includes mergers and splits will eventually lead to more robust, variegated companies with higher-quality products and more resilient business practices.
People's thoughts?
1) Adding engineers to a software project only makes it later
2) Dueling projects. The more politically powerfull will win
They all keep shouting how offshore outsourcing will cut costs, boost the bottom line, cure cancer and bring world peace. That the savings are so COMMANDING that they MUST get rid of US and Western European jobs to send the work where the labor is cheap.
I'm sure we'll soon be seeing an emergence of Indian and Chinese software companies producing software that competes directly with the Western bigwigs. Guess where they got that knowledge?
---------
There is inferior bacteria on the interior of your posterior.
So screwing customers and employees helps your stock remain high? I'm shocked by your valuable insight. There is plenty of evidence that acting (relatively) ethically in business is the best strategy for long term success.
Consolidation is only natural among relatively "young" business sectors ("economic history" is rife with examples). With the proliferation of companies in the sector, overlapping product offerings, finite market size and the struggle to offer REAL value propositions to customers it's rather inevitable.
;-) ).
Now if you add the unique trends that are pressuring this sectors consolidation like Open-source and "off-shoring" it's rather a surprise it's taken this long for the media to recognize it. Let's face it the software sector has grown bloated and in a lot of cases has lost touch with customers needs. A good "shakin-up" is just the ticket for improved quality and reasonable margins (re: pricing).
It's a great strength of capitalism that the market eventually will grab a shovel and bash in the heads of those companies whose demise will lead to better value for the customer (well that's the theory anyways
People have been kicking around the half-of-600-companies-need-to-die number since the bust. The problem is too many people drank the Kool-aid and pumped public money into companies that should never have come out. Remember? These were supposed to provide the infrastructure to power the lunatic ideas at the top of the frothy crust. And it's taking a while for all of these companies to slowly burn through the last of their public money. It's astounding how many well-known names in software have enterprise values less than their cash in the bank! Just run down the list... (names withheld to protect the shareholders). All are dead men walking. A previous poster had it dead-on however- FOSS mediates a secular change in the buying patterns of enterprise IT, so there really is no need for all of that garbage. When the last of the late-90s IPO cash is burned up, they will disappear without a whimper. Flamebait: to a first approximation, there is NO software you have to pay for that can't be matched by FOSS, except for custom and narrow-niche jobs.
Agreed. But to imply that lack of competition will lead to poor software quality has only been demonstrated in the proprietary software arena. Yes, let there be no doubt, Linux, and more specifically, the user-land tools, most definitely need to become more user-friendly. But, there is no reason that they won't improve. In proprietary land, OP is correct.
You are being MICROattacked, from various angles, in a SOFT manner.
Nope. Being first to market with just-good-enough is more imporant. Besides, if it's crap, most people will still buy it.
Muhaha. Good one. Consumers (aka: people) know their place. They're used to being treated like shit because they value the 'everyday low prices' more than being treated well by a local biz with a human face and little economy of scale.
--
Power to the Peaceful
Sigh. Time for business 101...
Giving out rebates that customers don't cash increases your profit.
Large companies market themselves as valuing integrity because it plays well with sucker^H^H^H^Hcustomers and increases your profit.
Making better products is expensive. It lowers your profit. Especially since people will buy pretty much anything anyway.
Hiring people from countries where you market your products is expensive and therefore lowers your profit. What's more some of them are educated and troublesome and have silly ideas like unions and workplace security.
Draining the economy is ok because this is long term, long term is in the future, the future doesn't exist. What is important is maximising your profit.
Making things right the first time means spending on R&D. R&D is expensive and may not yield results. A dubious business move.
Friendly customer support is expensive. It requires qualified support people who are expensive. This is not acceptable. It hurts profits.
Warranties are not good for business. They hurt profit. They cost money and divert customers from buying a new product.
That's it for today class, for next week, please write a business plan to privatize a major world religion. Consider going public after two years and buying your two major competitors after four.
Please leave in an orderly fashion.
May contain traces of nut.
Made from the freshest electrons.
Look, I'm an architect - buildings, UK, not the sort that the title implies here. It's a mature market - we've only been at it a thousand years or so ;). There are a small number of people in this profession hereabouts, about 28K in all; for reference that's about 1/3 rd the number of UK physicians, for example, and the training takes longer.
Do we collectively have radical ideas on innovation in structure, envelope, living arrangements, the cityscape, living on a small island? hell yes. Is there a market for it? By and large , hell no. So what, you are asking, is the relevance of this analogy? Software is a commodity. There, I've said it. It exists to solve people's immediate problems, and actually, that's mostly sewn up right now. The reigning paradigms aren't perfect - far from it - but software is an area that everyone has now some interaction with, and certain expectations of. Changing paradigms is slow, and innovation is only a part of it, and not necessarily causal. All too often innovation is a precursor to being bought-up by someone with a bunch of shareholders to impress next quarter.
Architecture again. Guess the %age of U.K registered architects who are self-employed? About 60%. How many UK architectural practices employ >100 people? Er, less than 80. Do UK architects dominate in %age terms of leading construction projects in the UK? NO, far from it - that's the speculative developers and homebuilders, cookie-cutters in other words. These groups make their profits from (and only risk capital on) the familiar, the proven, the banal. What does this tell you? It tells me that the desire for innovation and the marketplace are two different entitites, and while the desire to contribute is strong (all those headstrong one-man-bands) it goes nowhere without market-savvy and a willingness to play the accountants at their own game. For that you have to focus on the unique value you bring - and it isn't necessarily what you consider to be your strongest suite. The big UK practices tend to do very commercial work. Many of the remaining 60% spend their lives doing comparatively small jobs, where the sense of being in control hopefully compensates for alarmingly-low professional salaries.
The point is, rarely in any situation will innovation for it's own sake bring you any more than a fuzzy warm glow inside. The market will go on without you. To 'win', to make the idealistic the everyday, you have to take-on the fight at its most mundane level, even if -initially- it feels like selling-out. Go play the undercover agent, be idealistic. You'll find that others don't agree but you must remind them - and believe yourself - that all worthwhile change comes from within.
This is not the nineties.
I remember when anyone with a CS degree who knew what http meant could get a job as a trainee programmer. I actually remember taking a test for an anti-virus company which had the question "What does TCP/IP stand for?".
The fact is that now, those people have either become managers because TCP/IP was the only acronym they knew, or they knew all the acronyms but didn't know how to make money from them.
I make software on GPL for suppliers because software companies can't compete - the economics doesn't work. If you spend $20,000 learning how to program, a company has to pay you a minimum salary to recoup those costs. As I don't work for a software company and programming is not my job, I add value to my role without feeling the financial pressure of making shrinkwrap software for a living. Everyone benefits, apart from software companies.
You think this doesn't apply to big software companies? Look what's happening to Global Exchange Services (GE Exchange Services) in the face of peer document exchange (eg. XML over FTP) I can write an XSLT to convert their EDIFACT EDI to XML. That'll be $800. Can a multinational compete? Well giantkillers are the norm. Welcome to the new software capitalism - enjoy your stay.
"It's not your information. It's information about you" - John Ford, Vice President, Equifax
I think if I was just allowed to hit people with my attitude readjustment cement shovel life would be better and I can improve the economy.
Maybe you could start an attitude readjustment cement shovel company ? ;)
May contain traces of nut.
Made from the freshest electrons.
By being hired as consultants to make things work. I find it quite ironic that the article refers to commercial software (closed source) companies that are failing. Meanwhile, companies that sell open source software, like Red Hat and Suse are surviving. IBM saw the writing on the wall and started selling OSS. No, the value of "IP" as owned by a corporation is very low. The true "Intellectual Property" that is highly valued cannot be cast into copyrights or patents, it exists only inside the brains of people. Because, no matter how good the documentation is, you'll always need a trained, intelligent, and experienced professional to understand it.
Blame the guys who wrote first compilers! And 'make' and 'yacc' and 'lex' and all other time-saving tools! Imagine how many programmers would be employed if they would have to code Office XP in pure assembly! ;-)
:-( The "India" server farm seems to run a bit cheaper than the "Kentucky" server farm, but I will keep you in mind when we have to do some sensitive contract work for the Govt.
Or, consider the whole sub-continent of India as a super-duper server farm implementing 6th generation programming language: it takes program specs in human readable form (and some little $$) and generates executable ready to run. All you have to do is to have an IDEA of what you want to code, and it gets coded automatically, programmer's nirvana, right?
Oh, you are saying that you do not have any IDEAS to implement, but you know Java, Visual Basic and a little bit of COBOL picked up in 1999? Well, sorry for you, dude...
Paul B.
Professional programmers who are open source proponents in their spare time? WTF? Is that like a skinhead who's a black panther in his spare time?
I would but I have a problem getting insured for that and getting good lawyers. Plus the market is pretty slim no one wants to get their own attitude readjusted.
Microsoft?
There you are, staring at me again.
I REALLY REALLY fear that software companies all end up like auto companies 10 years from now. When you buy cars, you buy from a big name Ford, Mazda, Nissan, Honda etc. There are not thousands of car dealers like there is software companies.
So it's possible in the future to have companies screw you with a $20,000 home operating system if competition isn't fierce and tight. That or linux.
Yes, Linux has to improve, but it has nothing to do with "market penetration". Hell, it's not even on the market!
Mind Booster Noori
These companies are attempting to solve customer-specific problems with generic code. Guess what? It doesn't work.
Their customers would be better off buying COTS software for their generic needs and creating or contracting for custom systems for their unique needs.
Why don't companys just change their values instead of trying to screw people?
The short answer, and the long answer, is greed.
"it wouldn't surprise me that such people are now moving on to the next big thing now that IT isn't so hot anymore."
I hear McDonalds is a growth industry.
"I was in college in 2000 and I saw many students who just plain did not understand their computer at all trying to learn how to be an IT geek just in hope of the money..."
Well I saw plenty of people getting into customer service, who didn't understand it, just to make a living wage.
Only people who love customer service, and telemarketing should get into it.
Those greedy software companies! How dare they write software just to make money! They should give the software away, since they're so rich and we're so poor. No fair, greed!
Life in Orange County
I mean, when computers were running MS-DOS or were unix CLI terminals, making a payroll program must have been a challenge. Nowadays, a pre-bundled spreadsheet program will do it for you. An in-house database-and-html-proficient sysadmin may make quite a lot of that intranet solution all by himself.
If so, this is good, but ironic. Programmers, hired for software companies, have become so cunning that they have competed themselves out of business.
It is good, though. It shows that computing is making progress - quite simply some "admin friendliness" in addition to all this "user friendliness". And it is thoroughly reassuring to know that the open source world has come as far as it has before the cathedrals go bankrupt. If only Microsoft was left, I would have been afraid of what's to come.
Roses are #FF0000, violets are #0000FF, all my base are belong to you
Amen !! well said.
The problem is non-dividend-paying stock. When I buy stock, it is for one of 2 reasons. I want to make steady income from dividends. Or I want it to go up in value so I can flip it for a profit. For beginning companies, it doesn't make much sense to pay dividends since the company needs money to expand into new markets. For established companies with strong income, what else are you going to do with the money other than line executives' pockets? There's only so many stores that a company like Starbucks can open. If they come close to this number, I'd expect them to pay out profits to their shareholders, otherwise I would dump the stock. Because the only way they could really grow any more at that point is for the company to play accounting games, or engage in short-sighted cost cutting. In theory, older established companies that do not have shrinking market share will be the most ethical and provide the most secure and pleasant jobs. But this can be true only if management wants it to be.
... I more or less agree. I can see sometime (maybe soon) when stand alone software companies are pretty much dinosaurs. To me, software -the development-belongs integrated with ANOTHER business that actually manufacturers stuff for sale, or services stuff for sale. As such, off the shelf free is good for a start, then customisation on a corp by corp basis will be where the demand for constant devlopment comes from. To be *just* in the business of software development itself seems like the "all your eggs in one basket" idea. You can't sell "free", but you can sell "free & fancy", and the fancy part gets back to the widget for sale, so that's where the developers need to go for the bread and butter, and still do a little of the free and fun on the side. And if the company pops for a percentage of the time to be in the "free" zone, so much the better.
I don't even see big "free" distros making it long term unless they have some serious cash alliances and business ties with widget makers, whether that is a computer as the widget (saturated market), or just some other widget (still wide open).
Really, that's the only real way MS made it, getting tied in directly with the box vendors in such an overwhelming fashion. if people would have had to go out and actually purchase all their software as boxed sets off the rack someplace, no way could MS have made it so big, nor could they have charged what they charged.
And because this is now and not then, and FOSS is a reality, and because there is such a plethora of software "stuff" out there now, that getting tied in directly, as wholly owned or as a tied in division, with any hardware-widget corp, is probably the safest bet long term for developers to keep their editors hot and their wallets at least somewhat full. Embrace the free, work at the fancy for the loot.
The notes section of ESR's Magic Cauldron has a wonderful comment that suggests that since programmers and support staff appear on the books as a liability, expanding by hiring more staff is a net loss. However, the aquisition of another software company, which is primarily valuable because it is a bunch of other programmers and support staff, is seen as an investment on the books.
It all seems so bizarre that the factory model treats software as if it has some sale value, when it's really the service provided by the programmers and support staff that has real value. In this topsy turvy way of looking at things the accounting systems artificially encourage mergers rather than increasing staff because the former appears as growth, while the latter appears to be a loss.
All of this is why we end up with huge companies that produce mostly shelfware with a point upgrade cycle that is not backwards compatible so that customers are forced to keep sending in money or be abandonned. An honest service model would be much better for everybody.
Signatures are a waste of bandwi (buffering...)
So, to the extent that this prediction comes true and a number of closed source companies get bought, does this mean the closed source ecosystem is going to get somewhat smaller?
Those greedy software companies! How dare they write software just to make money! They should give the software away, since they're so rich and we're so poor. No fair, greed!
Hey there, Space Cadet. I thought the thread was about corporate American business in general and its practices, not just software companies. But if you insist on making it software-specific, there's no way I can pass up a chance to point out Microsoft's 80+ percent profit margins and 50+ billion in cash. You do know that American grocery retailers have a 1 to 2 percent profit margin, don't you? Greed in software companies? Of course not, I work in software. I would never suggest any such thing.
Or file a hoard of frivelous IP lawsuits.
IT (well, the good stuff) is a service now, not a product. Rather than massed conglomerates manufacturing a generic product (which is largely the case for cars, for example, or the increasingly stressed Microsoft), software/IT is about providing specific skills, industry knowledge and support services. This is better achieved by small, highly focused organisations.
Large companies will slowly be replaced by boutique industry/regional focused businesses who understand their CUSTOMER better than the competition, rather than massive faceless companies who take 2 years just to work out their customer's name.
So, are we supposed to believe that without this subsidy these corporations would have been even less viable? Perhaps the way a junkie is less viable when going through cold turkey.
Where did you get the idea that the thread was about "corporate American business in general and its practices"? The TITLE of the thread is "SOFTWARE COMPANIES - Merge or Die?" Does that sound like a discussion of generic business practices to you? Who's the Space Cadet?
Open source allows multiple companies to exist: Red Hat, Mandrake, and Suse all have similar products. Closed source encourages consolidation into single companies, e.g. Microsoft.
:) However, the same is true of closed source companies as well. It is more profitable to offer an ongoing service (e.g. support) than a one time sale (e.g. a software license).
Closed source companies use proprietary file formats, thus stifling competition. Further, since software's costs are almost all development costs (rather than production costs), the marginal cost of production is close to zero and the fixed costs (barriers to entry) are the majority of the price. The result is that areas with one company will have cheaper prices (and fewer features) than areas with multiple companies.
Open source creates shared file formats, fomenting competition. Again, it is advantageous to only have one code base. Yet, with open source, this does not mean just one company. Many companies can work with the same code base.
I would agree that service/support is a more reliable source of income than selling open source licenses
The article was about software companies, the thread was about big business. Space Cadet was part of the poster's nick. Duh. Get a user account coward, and take your lumps you clueless sack of byproducts. No offense, of course.
Apple
Now let us all remember, the software (the intangible formula/equation that can be replicated at near zero cost) is the important pricey stuff, and the hardware (that tangible object with per unit production cost) is going to be free. A market based on selling goods at prices that are nearly 100% margin is obviously sustainable.
in that case, i say die :)
photoplankton
I suspect that the American election this November will offer a catalyst. Electronic voting is far, FAR more complicated than most people suspect. Even those well versed in cryptography only know have the problem. You have to deal with both the problem, the people and the politics. A very tall order.
The fundamental problem is the Austrailian ballot wants to provide two things, that repel each other like the north ends of two magnets: anonymity and accountability. We want a system that can accurately tally the votes in all races (itself a difficult problem domain), while divorcing the vote itself from the fact a vote was cast. With a paper ballot, its easy enough to have a tear tab that visually confirms receipt of a specific ballot while divorcing the vote from the receipt. Computers offer the task of accounting for nearly the entire process without need for human overview. I don't think I can visually inspect a hard drive for its contents, can you?
The problem itself seems daunting enough, but you're hardly finished if you've got a solution. You'll need to promote and sell this thing without alienating the people running the show (I hope that phrase isn't offensive). They want paperless voting real, real bad. And age demographic of voters is in need of things like visual enhancements and handicapped accessibility. So you're gonna have to break the news to them that they can't have their pie today.
Then theres the politics of it all. First, the special interests groups. Understandably, groups that promote the interests of the blind, and the elderly are in favor of the machines. What's a little more intriguing is where the ACLU comes down on this. I was under the impression that the national group had sided with the impaired voters, but I can't seem to find any supporting evidence. On the other hand, I can find some local chapters in technologically affluent states rejecting them. Another odd opponent is the Women's League of Voters or some such (its been a while since I last dealt with the issue and I've tragically misplaced my main references on it =/) . They really want those machines. One of their big deals is volunteering to run the place. Again, some of the local chapters have disagreed with the statements of the national organization, which helps show the characteristic of a national lobby organization, even one as seemingly benign as a women's right to vote group.
Finally, there's the matter of party politics. The owners of voting machine manufactuers are overwhelmingly Republican. This seems pretty suspicious, but you gotta realize that the owners of anything are overwhemingly Republican. Thats a deep statement, perhaps deeper than I had originally thought. Anyways, as highly compensated officers of a profitable corporation, owners, presidents and CE?'s are prone to political donations and lobbying, especially given the nature of their business. Some have even gone on to successfully win the bid for office in DC. This is something they don't want out, simply because its an election year, and implications of wrongdoing aren't well recieved, even if they're found innocent in the court of public opinion in the long run.
Digital voting today has solved the people problem and the politics problem, but I think we'll find they haven't yet addressed the problem problem (I think if I have to present this to someone in the field I'll have to rework that one...). If digital voting fouls up the presidential election, there will be a shitstorm, and lucky will be the person who walks away with a clean face and a bright smile. Bugs alone are enough to really make a mess of things, but there's unlimited potential for intentional abuse, be it someone out to prove a point about computer security or someone who believes just a little bit more in a pet cause than in fundamental American democracy.
I Browse at +4 Flamebait
Open Source Sysadmin
Finally, everyone is *equal*!
http://www.collaborativeproject.org/
I am thinking that all of these large corporations are using this P2P scare to their advantage. Music industry, Movie industry, and the Software Industry are all having " huge problems because of people stealing their products". I believe the MPAA reported something in the range of a billion dollars for overall profit in the industry last month, a new record gross. Yet they are doing poorly? Software companies now must merge? looks like a good excuse to form a bunch of microsofts aka trusts(fat cash cows with no inovation, no competition, and nicely equiped with a perfect scape goats) but digitizable industries are building up resentment and "statistics" all in line for congresses upcoming legistlation against P2P software. ...well, either that or open source software is just plain cleaner, cheaper, and more inovative that anything they could ever accomplish, and is becoming more and more availible to the "user". Either way everyone needs to stop feeling sorry for thes companies, they are just getting their "come upins". Especially the turd that won't flush: figting all the way down(microsoft)
And good riddance, I say.
The "new" Enfield Bullets, with their modern Mikuni carb and electronic ignition, are still *basically* the same old bike but with a few tweaks to allow for modern manufacturing. So basically, the new Bullets are FreeDOS...
You really think that foreign goverment needs outsourcing to insert a torjan horse ? Why can't they just pay an american worker to do this ?
A big company that does not want to expand until it has a market share of 101%, even if that means cost cutting like there is no tomorrow? Yeah, right.
USE HOT GRITS WITH STATUE OF NATALIE PORTMAN (NAKED AND PETRIFIED)
eye gas that's what those fauxking corepirate nazi payper liesense/stock markup FraUD peddlers whaaaNT US to believe?
consult with/trust in yOUR creators.... managing/sharing big things since/until forever. see you there?
I look at it this way, when the big companies fail for having the wrong tallent, it will open up jobs for those that know their systems and have a creative tallent.
Just hiring because they are cheap does not deliver the right blend of knowledge, teamwork and creativity needed by a truly good software developer.
Technological comapnies have had a boom/bust cycle since the 1940s with the Manhattan Project taking most talented engineers and then dumping them once "the bomb" was developed. This was also repeated in the 1960's with Apollo program sucking up Electrical Engineers like there was no tomorrow (together with mechanical and in some cases civil engineers as well) then with the cancellation of Apollo 18 the whole situation collapsed.
Go back and read what the employment situation was like for Electrical Engineers back in the 1970s was like. I heard figures close to 50% unemployment for E.E.s during at least part of the '70s. What this did was set the stage for massive entrepreneurial growth, because suddenly massive amount of highly trained talent was available to move into new directions rather than being consumed by these massive projects.
Right now I see the same sort of thing happening in the software industry, where college CS graduates are being "bought" for cheap and there is quite a bit of entrepreneurial activity to start the next wave of software companies. It won't be the companies that you are familiar with, or even writing the kinds of software that has been written before. It has been done before, which is why it won't be done.
There are a lot of companies right now that are working "under the radar", that aren't a part of that 600 that will be doing the mega mergers. One problem, however, with all of this merger, fallout, and new company cycle is that software developers are kinda out in the cold as they get older, and glowing pension plans and 401K plans mean next to nothing when you really think about it. What this means when large numbers of software developers start to go grey remains to be seen.
perhaps these big software houses like veritas should try making good software for a change. not only that, but their prices are outragous. get a clue guys, if you are going to charge big bucks, at least try to make it work right!
if you think microsoft makes bad software, wait until you deal with the crap veritas, hp (openview), bmc, etc. come up with.
On a long enough timeline, the survival rate for everyone drops to zero.
"Learning is not compulsory... neither is survival."
--Dr.W.Edwards Deming
You got it backwards.
Large companies are not going away. Small companies are, or fusing to eachother until they too become large evil companies.
I think it's too early to be calling for the computer industry to consolidate. Consolidation generally occurs when companies run out of innovation and they revert to increasing profits by monopolization (or oligopolization) of their industries. The computer industry still has a long way to go. Some sectors may see consolidation (PC manufacturing, semiconductors, etc) but a large portion of it is still in its infancy.
Sivaram Velauthapillai
Seeking the meaning of life... @slashdot of all places
Anyway, just wanted to say... great post.