The Future of the Software Industry

madro writes "Remember 'Does IT Matter?' a while ago? Nicholas Carr is back with an editorial in today's New York Times following Microsoft's decision to dramatically reduce its cash stash. Carr's take: Microsoft is admitting it can't find better uses for its cash, due to the growing maturation of the software industry. No mention of open source, although Apple's consumer-targeted model of free iTunes driving iPod demand is one listed alternative." Reader CodeArtisan submits another piece about Microsoft's loot distribution, and Newsforge (which is part of OSDN along with Slashdot) has a story about the future of commodity software.

Comments

The Problem At Hand

[Effugas]

MS's giant cash pile is too deep of a pocket for international juries and governments to ignore. The disbursement is being directly driven by the fact that the company has enough cash on hand to be able to shrug off $600M judgements.

What, did you think the timing was accidental?

--Dan

Re:iTunes driving iPod!?

[0racle]

And your everyone? The iTunes interface is a reason for the iPods success, perhaps not at first, but if iTunes was a pain to interface the iPod with, a lot of people, as in people who wont whip up a perl script to do it if its not what they want, would have thought twice about it. The iPod took off in part because the word of mouth about it had nothing negative to say about it.

Exactly!

[weston]

It think what is happening is that it is getting very hard to charge premium prices for software that implements old solutions.

Precisely. I think we are indeed going to see an explosion of software, especially niche software -- and this is possible exactly because platform software is becoming commoditized.

Nope, it's not new wisdom. It's covered by Eric Raymond in his essays and it's all over the place... but for some reason, only a few people seem to understand this.

This started around the time of the tax cut

[K-Man]

This was a fairly expected move due to the tax cuts you note. Cash in the bank can be realized either as a capital gain in the stock, if the company holds onto the cash, or as a dividend of about the same amount. The old system encouraged capital gains instead of dividends, but the new one makes dividends preferable.

MS went for years without paying any dividend, because stockholders were able to get their returns in price appreciation. Now, expect flatter pricing, with more dividends. That's good news for stockholders, but bad news for stock option holders.

even $60b can't buy much innovation

[dekeji]

The problem is that innovation can't be bought with money or scheduled or be driven by market forces. Innovation is a social and cultural phenomenon. It requires that an entire society values education, thinking, reflection, and analysis. Even Microsoft's cash reserves can't fix the social and cultural problems we have in the US.

It also requires that a society frees its creative members from having to worry about whether they are going to have a job in six months--someone can't afford to spend time thinking about something that may become a big thing in 10 years if they need to help their company survive this year, every year. And, despite Microsoft's cash position, they are not a company that you can count on being secure in the long run: companies like Microsoft can fumble and face hard times.

The best thing Microsoft has done for innovation has probably been to create a few thousand people that made enough money to leave the company and pursue their own interests without having to worry about money. But that number is far too small to make a big difference to innovation overall: innovation and breakthroughs are rare events, even among a population that is perhaps smarter than average.