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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.
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
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.
"I use a Mac because I'm just better than you are."
I don't think that what software is turning into a commodity. It think what is happening is that it is getting very hard to charge premium prices for software that implements old solutions. My customers (mostly) don't care about programming languages, OSes, or database managers. But they sure have to pay for them.
But there is very little innovation left to be had in these basic layers, so why are we being charged thousands, and even tens of thousands, for licenses? Surely not to support R&D.
It may well be that we are entering an era when we will see a great blossoming of innovation, if only because sole proactitioners and small teams can afford to the tools to tackle the kinds of problems that need to be solved today.
This akin to the age of enlightenment, but we aren't quite there yet. No one knows the future of IT and software. We live in interesting times. The next 5-20 years will be....interesting.
Bill Gates is giving his $3.3 billion to charity, although his yearly dividends will go up quite a bit (up to $578 million)
Casual Games/Downloads
you have to ask, why now? MS has been in business for such a long time (in software industry terms). MS has never been known to hand out payola. why now?
MS has nothing else to keep the mindshare. OSS is creeping up outside the realm of just the geeks. MS has nothing effective to fend it off. except hoards of cash.
without the payola, the stock would start on a slippery slide downwards all the while losing mindshare. and remember, mindshare among geeks is what got MS to where it is in the first place.
all this just to buy time, literally, until longhorn ships.
if there is any 'after burner' somewhere in the FOSS community, the time is now to kick it in. to win over mindshare before longhorn. because from now until longhorn, MS has nothing but diversionary tactics to keep people interested in MS.
and to all MS fanboys out there, i'm not saying this is a bad thing. it's a great thing. i'm just making a guess as to why they are doing it now.
One thing that's been increasingly bothering and intriguing me, as I get older and older (I'm 27, I'm getting middle-aged!) is what is the fscking point of having loads and loads of money (á là Mr. Gates), if you are going to die nevertheless...
I mean, it's pretty obvious that you can only spend a finite amount of money in a finite amount of time. Period. And why do people care about the future of business dozens (even hundreds) of hears after they're gone?!?
I've heard of some companies buying water from 3rd world's countries.... they're addressing a problem (as a company) that will arise after each-and-every employee is dead and buried...
I am not saying is wrong (althoug I do believe it is), but I just don't get it. Our society is builded upon negating the evidence that we are all gonna die.
So, finally, and to stay on topic, the idea of Microsoft giving back some of it's money, should not be as crazy as it sounds right now...
--krahd
mod me up scottie!
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.
Tweet, tweet.
Name one piece of non-videogame consumer-level software that can tax a 3.6Ghz P4 with 2GB RAM. Hardware isn't a bottleneck in any way.
'Standards' in computing only impress those who are impressed by things like 'standards'.
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.
---- "If we have to go on with these damned quantum jumps, then I'm sorry that I ever got involved" - Erwin Schrodinger
No. MS has this much money, in part because they make poor software. Writing better, safer code would have cost them both money and strategic advantage in the positioning and advertising of their products.
LRC, the best-read libertarian site on the web
[The Scene: a writer at their desk with deadline looming:]
Must have idea...
Must get editorial in on time...
Politics are done...
Not much happening in the literature scene...
Chomksy stuff is too complicated...
Must be controversial...but not too controversial to the prime demographic...
Whoa...I've got it!!!
[writer bites tongue and begins scribbling onto a ruled notebook, we see the title:]
"The Software Industry is Dead!"
[writer scribbles madly for 90 minutes, has a lot of rough red wine during the scribbling, and then falls asleep on the draft (and dreams of Hemingway).
Perhaps a comparison between the bonzai and the ancient jungle. Rigid nano control versus emergent niches. A good bonzai master does not pretend to go against the nature of tree, however. It could be argued that MS is too big to be good.
Personally, I think they should take their cash, set up a good dozen isolated coder communes and evolve a new direction for themselves, one that doesn't involve tieing up the legal system, blanket enforcement and predation. They have enough to change the rules, to shatter the 'office supply' mentality. Without a drastic shift, they're screwed (well as screwed as a giant monopoly can be). They've missed the beauty that is open source, and, as it lies, seem doomed to be tied to a life of fostering servitude. Like moss looking up at the flowering canopy.
Phew, you had me worried there for a moment... I thought you were talking about Windows! Then you mentioned "beyond human management" so I realised you couldn't be.
Dave: HAL, please download and install Service Pack 2 onto yourself.
HAL: I'm sorry, Dave, I can't do that.
Dave: Very well, I will do it myself.
[Twelve hours later as Dave has downloaded the 500MB Service Pack 2 to HAL]
Dave: Service Pack 2 installed now, HAL. How do you feel?
HAL: (in slow drowsy singing voice) Daisy, Daisy, give me your answer do...
Gentoo Linux - another day, another USE flag.
Many firms have poision pills and other defensive postures against this aggressive practice, but I've always been surprised no one has tried to buy and dismantle M$. I was also surprised they never paid a dividend, as its a psychological move for investors. Then again, most people aren't buying M$ for a diversified, low-risk retirement portfoilo.
Coming around to the specific topic of timing, it certainly makes sense that the tax code is encouraging it. If you're netting over 7% leaving it alone, why pull out retained earnings to have a cut taken out of it? When I saw they had cash doing nothing (ok...mortgage backed securities) and were keeping ahead of the risk-free rate (rate of a 10 year bond), it's a no brainer to leave it in Microsoft's bank account. I'd almost say you're better off telling them to dividend re-invest. You avoid the taxable income, increase your holdings, and benefit more from the impending stock buy back.
I really hate M$ for its predatory marketing practices and $hitty products, but from an investing standpoint it's hard to hate them.
The software industry is maturing. It's also broadening. There are zillions of little niche markets well served by a bright high-level language programmer who's willing to listen.
(Hint: I'm one of those listening programmers - I'd like to think I'm bright)
Don't look at software in terms of "an industry" or as "a product". Look at it as a means to solve problems, and then work out terms where by solving problems, you get paid.
Software isn't the point anymore. The solution to the problem is the point. Look at IBM and their services department. They don't care about the software - why else would they deprecate their zillions of dollars invested in AIX and go with free Linux?
They sell services, and software is just the means. Why not use a community supported, free product?
In an immature market, having the product matters. Specs like N Mhz and M superBytes are important. In a mature market, the solution to X problem matters. Who gives a rat's ass about Mhz or superBytes?
So quit with the "software is manufactured" model of the 1980s and get on with the "software is a means to solve a problem" model of the 21st century! There's plenty of money to be made, you just have to tilt your head 45 degrees and look for the problems waiting to be solved!
I have no problem with your religion until you decide it's reason to deprive others of the truth.
..."billions of cash" means that we could have instantly cured software of "buggy" and "security holes". IBM 360 here we come
... "compensation for their illegal activities" because rokzy is a better judge and jury than any legal system, of course.
... "fucking up the industry" must be because MS has gotten rid of those 18 Wordperfect disks I used install for incompatible printers
like it or not, money solves a lot of problems. it lets you pay competitive wages to hire the best of the best. it allows you fund the massive R&D for usability, Q&A, development and more. more money == more potential for a better product.
better judge? na. he's just agreeing with both the US justice dept and the european union, both of which have convicted microsoft of being a monopoly, and abusing those powers
so now we have the flipside of the situation today, where office formats are totally closed with no plans to open documentation on it. where mshtml totally abuses w3c specs. we have to deal with microsoft reinventing every single protocol and standard and then closing it up rather than using what already exists. they've done more work to throw a wrench into the industry than any other company in the history of business i think. no one in their right mind would claim windows is a more stable, promising os, than things like BeOS, OS X, or Linux. if all things were equal, (i.e. # of market share) all 3 of those are clear winners in stability, interoperability, and security.
so yes. microsoft HAS fucked up the industry. and it won't get any better any time soon.
- tristan
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.
The current software situation is just the logical consequence of the actual monopolized industry state.
Without real competence there's no way to create new profit areas. If a small firm finds a niche it will be desplaced as his size reaches a critical magnitude. Big corporations doesn't need to innovate, in fact 'innovation' is only a marketing buzzword.
Now, the point is: Software industry is being frozen by big money corporations, but software is still a hand made creation.
There's no way to stop people writing software, the only real possibility to limit people willingness to write software is to try to convert the process in a very difficult and technical one (ie: raising the entry level). The process is a well know one, and has been done in every mass production industry (electronics, mechanics, etc). That's why we see so much complex and difficult 'standards' (ie: SOAP, CLR) being actively pushed by big corporations.
But no matter how hard they try, software is different from others fields, the complexity factor of software is far greater, that's why small teams and even individuals are able to create great software pieces (very much like music), that's something corporations cannot fight, and that's why things keeps changing in this field.
Some corporations see OSS as a threat, but that's only the logical effect of the nature of software creation in a connected world, the real threat is simpler than that, the real threat is that software is writing.
What's in a sig?