Software is *not* a product
For a while now I've wanted to write a thread debunking the idea that apps are a product. I've finally some time so let's get started:
First, let's examine the history of products - all the way back to our ancestors who traded grain for stone, tools for meat and so on. In that scenario you have people putting effort and producing real physical things made of scarce resources. This means one could only produce a set number of products which drove demand (and in turn raised value).
Now let's jump to the digital age and examine why software companies do not sell products:
1) Software is made of materials that are not scarce - you can have as many SDKs installed on your system as you want. Also APIs have unlimited capacity.
2) Software reproduction takes little time and no effort - on a modern computer it will take you 1-2 seconds to replicate a 20MB application. Therefore software companies differ from carpenters of old who had to put many hours into making another set of furniture.
When you combine those two points - the abundance of digital resources and the effortless replication of software - you completely destroy the laws of supply and demand. When something is scarce, the price goes up; if it's in abundance, the price is low; if it's in unlimited quantity (as is the case) the price is zero. It's like the air we breathe - in terms of abundance - it's absolutely essential for our life, but no-one is charging you for it.
And here we come to the distinction - software is not a product. It's a service. While developers cannot charge for their application on the grounds that it's scarce (see points 1) and 2) ) they can charge for it on the grounds that they have put effort and time into making it. As you can see buying an app is much similar to getting a haircut, rather than buying a cup of coffee.
I think I've rambled long enough. I hope you find something of value in the post.
Comments are more than welcome.
Last edited by iDonev; 05-19-2012 at 10:25 AM.
- 05-19-2012, 08:47 AM #2
- 05-19-2012, 09:05 AM #3
To the original post... software can be a product, or a service depending upon agreements made between providers and consumers.
I'm one that would prefer software on a service model... with a smaller upfront cost, and ongoing maintenance services.
- 05-19-2012, 09:22 AM #4
- 05-19-2012, 09:30 AM #5
I'm not quite sure what point the original post is trying to make--is it that software developers should charge less than hardware developers? That they should charge nothing? You seem to say both things in your post, and I don't really understand the distinction you're trying to make. The "haircut vs. coffee" comparison doesn't mean anything to me, as I'm still paying for both with actual money.
I am curious to hear what people think about the recent release of Adobe's flagship Creative Suite software as a monthly subscription service, a new idea for them that seems like it might make a good example for your post.
Last edited by iDonev; 05-19-2012 at 10:34 AM.
- 05-19-2012, 09:39 AM #7
- 05-19-2012, 09:52 AM #8
I think too that some of this distinction is actually consumer-driven: if app developers tried to charge for every upgrade, people would be up in arms (right or wrong).
Might also be worth asking if we are talking about apps specifically or a wider range of things—for example, a video game you download to your Wii. How does that fit into the game?
- 05-19-2012, 09:55 AM #9
It becomes a service when you pay ongoing fees for ongoing maintenance of the ones an zeros.
Last edited by iDonev; 05-19-2012 at 10:18 AM.
- 05-19-2012, 10:09 AM #11
If more people thought of software as a service, they would be more willing to pay subscriptions or have paid updates.
Last edited by iDonev; 05-19-2012 at 10:44 AM.
- 05-19-2012, 12:37 PM #13
I see what you mean, but I think it can work either way. And not every software update is free—unless we're talking about ios only. But that is a restriction put in place by Apple, which some devs get around by releasing an update as a v.2 app (see Photogene or Photoforge). People seem willing to pay for those—I know I did.
Subscriptions are a different ball of wax, and I don't think they make sense for the vast majority of apps.
- 05-19-2012, 01:13 PM #14
Interesting discussion. I would consider software as more an intellectual property than either a product or service. One thing is for sure some software is over while others are under priced. Updates, have traditionally been free, as far as apps are concerned, and personally I like it that way.