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 Post subject: Software Economics
PostPosted: Mon Sep 13, 2004 12:34 am 
Bitchin' Fast 3D Z8000*
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Lately, I've been watching the Angels (good job today!), working on a database project, running our school's ACM (some jerkoffs made me chair), and reading some blogs. This blog entry by Bryan Cantrill is good.... one of the better explainations on software economics I've seen in a long time.

Has a bit about OSS, so I thought it belonged here instead of in the PP.


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PostPosted: Mon Sep 13, 2004 7:27 am 
Java Junkie
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Very interesting article, Gadg ... it puts many 'instinctual' thoughts about software processes into concrete terms. In particular, this paragraph will resonate with anyone who has been involved in 'discussions' with people who pirate software ... particularly Windows.

Quote:
Software demand is normal to the degree that consumers have the freedom to choose software components. The problem is that for all of the rhetoric about software becoming a "commodity", most software is still very much not a commodity: one software product is rarely completely interchangeable with another. The lack of interchangeability isn't as much of an issue for a project that is still being specified (one can design around the specific intricacies of a specific piece of software), but it's very much an issue after a project has deployed: deployed systems are rife with implicit dependencies among the different software components. These dependencies -- and thus the cost to replace a given software component -- tend to increase over time. That is, your demand becomes more and more price inelastic as time goes on, until you reach a point of complete price inelasticity.(emphasis mine)


The 'installed software', in this case, is Windows. I don't mean installed in the physical sense of having it on your hard drive ... rather, it is 'installed' socially. The majority of PC users are familiar with, trained on, and only able to use Windows. So much so, in fact, that they believe that Windows is the 'only' operating system available to them, and they use this 'fact', in conjunction with the sale price of the OS, to argue that they have the 'right' to steal the software.

The price inelasticity of the software ... something Bill has worked very hard to achieve by making Windows ubiquitous in the PC industry ... becomes one of the pirate's favourite excuses for theft.

The author goes on to argue:
Quote:
If software suppliers have such unbelievable pricing power, why don't companies end up forking over every last cent for software? Because the demand for software isn't completely price inelastic. It's only inelastic as long as the price is below the cost of switching software. In the spirit of the FYO billboard on the 101, I dub this switching point the "FYO point": it is the point at which you get so pissed off at your vendor that you completely reevaluate your software decision -- you put everything back on the table.


This might sound familiar to Linux users. I've heard many people say that they switched away from MS products for this reason. THough, in all fairness, I think more people pick up linux out of curiousity or a desire to learn another OS (ie., geekiness! :) ).

Of course, as I read along, I realise that he addresses this point. :P

Perhaps taking notes and reading should not happen concurrently. :lol: At least, not when one is posting the notes.


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PostPosted: Mon Sep 13, 2004 4:51 pm 
Bitchin' Fast 3D Z8000*
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As an undergrad in Economics, I apprecitated the fact that he took the time to explain things using the correct economic terms (ie. elasticity, demand/supply graphs, etc).

I agree with your assessment that there is an actual cost (it does take time and effort to switch from Windows) and an imagined cost (Apple's are sooo expensive! Linux is for programmers only! Attitudes) that keeps Windows very entrenched (and in all fairness WinXP is much better than previous versions - finally).

I used to hate blogs... lately I've been finding quite a bit of good discussion on them though.


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