“As the software industry shifts away from selling shrink-wrapped software...”

date:2007-05-23 17:31:30
category:Economics of Software

In PC World, May 1st, there’s one article, “Shrink-Wrapped Software’s Days Numbered ” by Robert Mullins.  This has quotes and numbers.  Very nice, and it specifically identifies open source and SaaS as beating out shrink-wrap.

In MSDN, however, see “Building Distributed Applications: Architecture Strategies for Catching the Long Tail ”.  This makes shrink-wrapped software look “simpler” and less expensive than custom-tailored “line-of-business” software.

Then, Microsoft goes on to say that SaaS is cheaper still.

I guess this makes it something that can be stated as fact.  However, I can only find references to Microsoft doing this.

However, I don’t see how this is a zero-sum game.  There’s no evidence that SaaS displaces shrink-wrapped software.  If SaaS is cheaper, then this will tend to increases the volume of software purchased for constant dollars.

The Fourth Scenario .

The premise, ”...industry shifts away from selling shrink-wrapped software...” has to be rejected as not completely supportable.  This means that the rest of that specific scenario in the Information Week article is suspicious.

Specifically, Babcock uses the industry shift to conclude that Microsoft might eventually compete fairly and interoperate with open-source software.  Since the industry shift isn’t an exclusive choice, it’s possible that Microsoft could see enough revenue growth that they tolerate competition grudgingly, essentially maintaining the status quo of legal threats and posturing.

Can they do this forever?  Absolutely.  Greed and cowardice are powerful forces.  It appears the M$ is too greedy to let the whole patent business slide and too cowardly to risk losing everything on the possibility of having it blow up in their face.  They can hope for the lethal chill, but be willing to settle for endless legal fees.

Yes, endless.  At least until Congress rejects the patentability of software by directing USPTO and BPAI that software is just a “mathematical expression” and doesn’t qualify.  The lines of code that implement that algorithm are covered by copyright, and that’s all the protection anyone needs.

The other two scenarios in the article are remote possibilities.  It could be that enough legal threats will put a lethal chill on open source.  However, the number of companies using open source as part of a for-profit business makes this really unlikely.  It could blow up in M$ face if IBM’s vast patent collection (or the courts) reject Microsoft’s 235 patents as lacking enough prior art.  This means that M$ and someone with equally deep pockets go toe-to-toe, which is unlikely.

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