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"As software grows up" .. what do you do?

by sundialsvc4 (Abbot)
on May 07, 2012 at 22:02 UTC ( #969339=perlmeditation: print w/replies, xml ) Need Help??

I have in the past year encountered several variations of the same two business problems.   I wonder what each of you have found works best to deal with them ...

  • The “first adopter,” now left behind:   A company that was one of the very first adopters of a new and hitherto-uncomputerized idea.   Although they never sought venture-capital and therefore never became any sort of household name, for a decade or so they did do very well.   (After all, when you are competing with “there’s nothing like it,” anything-at-all looks great and pays well.)   But... now they are stuck with a Web 1.0 web-site and a rapidly shrinking customer base.   Competitors have watched their every false move and are now eating their lunch, but the company itself seems preoccupied with its “glory days.”   They’re in denial.
  • Open source, free apps, no revenue:   This company made a name for itself first with “open-source” applications and packages; some of which you might know.   It also produced a handheld-computer “app” which has been very popular ... for free.   More than 124,000 free downloads, in fact.   And about 1,900 copies of the “premium” version of the same product were sold for the apparently industry-standard rate of $1.00 apiece, and there was price-pushback for even 25-cents more.   :-/   Well, guess which one’s generating all the support-calls, and the negative reviews from “free-bees” who didn’t get their way!   Either way, the problem is:   lots of “customers,” but no revenue to keep the lights on for any of it.   The company can plainly hear “the great big sucking sound,” but they’re also in denial ... or maybe it’s just shock and terror.   The FMV of what they’ve put into this thing is a quarter-million easy, but all they’ve actually gotten for it is “recognition.”

As the entire global economy continues to “tank,” I suspect that many business enterprises are starting to take a much closer look at what might actually give them sustainable revenue streams ... and that the things which we have been doing and the things which we have been advocating for the last decade or so as “the new economy” simply are not passing muster anymore.   What to do?   How can these scenarios be turned around?   What cost justifications, and indeed what costs, might there be?   I am beginning to see the whites of their eyes.

Edit:   As I put in a comment below, I and my company are seriously in need of a serious discussion here.   I think it is a timely topic for all of us everywhere and that it needs exposition and discussion ... perhaps not so much to draw conclusions but to share observations and experiences and insights.   I know that there are long-standing customers out there who fear that they are staring bankruptcy in the face, due to technological evolution; and, they just might be.   Obviously Perl technology can accommodate anythin we ask.   Also obviously, our tools and responsibilities of course stretch well beyond “just Perl,” and this also happens to be the most esteemed company of software engineers I know of.   Hyperlinks welcome.

  • Comment on "As software grows up" .. what do you do?

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Re: "As software grows up" .. what do you do?
by moritz (Cardinal) on May 08, 2012 at 07:30 UTC

    The solution to the “first adopter,” now left behind is not to be in denial. Sounds simple, eh? It's hard. You have to admit that you're not the best. That you've made mistakes. It's a skill best learned young. It's what you need to make rational choices. There's site devoted to such issues which I've found quite interesting.

    Open source, free apps is well known too. There are lots of companies that make profit from open source software and the ecosystem around it. Red Hat has a revenue of > 1 billion USD, and their main product is open source. The provide training, certification and support. They also sell licenses, though I'm not sure how exactly it works (maybe that have some non-free programs in their portfolio, or they sell different licenses to those who don't like GPL).

    Github seems to do fine with providing mostly free service, and charging for private repositories.

    I think the key is to provide substantial additional value in the paid version, so that people see a good reason to buy it. And then don't charge just one dollar.

    And one must realize that not all open source programs can be monetarized. You simply cannot sell alarm clock apps for smartphones, there are just too many free ones floating around, and there's a limit to how much better you can do.

      Red Hat is an interesting scenario:   they immediately took on Linux to the corporate market, sold support-subscriptions at a reasonable cost but (except for a brief complimentary period) never free-of-charge.   They also had a very successful IPO (thank ye!!) and they bankrolled all that cash instead of spending it on riotous living, or so I am told.   (And so did I ... ;-) )

      Nevertheless, the core problem for the second-example company definitely is revenue.   And I suspect that a great many (Perl and otherwise) consultancies and support-providers might well be feeling that pinch in a different form.   Having software out there in the market is nothing but a great big sucking sound unless it can be tied, and kept tied, to a dependable revenue stream source.   Red Hat certainly did that from the get-go, and that good plan was in their original pre-IPO strategy document, but they also operate at a fairly big economy of scale and with deep pockets.   I am not sure that even they could have started with one business-proposition and switched to another.

Re: "As software grows up" .. what do you do?
by bulk88 (Priest) on May 08, 2012 at 02:09 UTC
    Patent revenues. Hire a lawyer, send out a few threatening letters, sit back and let the checks roll in.

    Another choice is cut all costs, live off what you have remaining.

    Another choice is sell yourself to your competitor.

      (Thin smile...)   No patents and no money for lawyers to fight them if they had them.   “Cutting all costs” means going out of business, and competitors might find nothing of value.   Furthermore, these are well-respected going concerns whose work is still very important to their customers’ own business operations.   “Falure is really not an option,” and it’s no place for flippant responses.   (I mean no offense by that, and cordially apologize right here in public if any would be taken.)

        In that case it's easy. If failure is really not an option, just tell the customers you're going to go out of business unless they give you eleventy squillion currency units.
        There will always be grandfather/old customers who are too set in their ways or the cost is too high to switch. If you live in the USA, you will get my point in this link, otherwise Google "Bell System".
Re: "As software grows up" .. what do you do?
by sundialsvc4 (Abbot) on May 08, 2012 at 13:47 UTC

    The “first adopter” scenario is in some ways the most interesting to me because it brings forth the question of what exactly should you do with an application ... now in-service and now revenue producing ... when the technology of the entire world (front-end) is moving headlong into tablet computers, but hasn’t completely done so yet and possibly never will.

    As an aside, we used a very interesting new tool on a couple of other projects lately ... check it out ...   It is a true cross-platform development language.   We haven’t suggested it in this case, but it’s the sort of situation I think we’re all faced with.

    Generally, the problem here is ... how to teach an old dog new tricks ... how to replace the engine while you’re driving down the road ... how to drive on two roads at once (possibly forever) ... and, how to persuade a client with rapidly declining revenues that money needs to be spent and spent in entirely new directions.   This concern, at least for us, is growing quite rapidly in proportion.

    As a (21-year old...) business, we mostly deal with applications that we did not write, very often after the original developer(s) have “gone on to greener pastures.”   Therefore, reverse-engineering and continuing to support legacy applications is very much a part of our business strategy and always has been.   The question here, then, really is strategy.   When you are wedged against, on the one hand, shrinking revenue because you are not in the lonesome position that you once were in, and on the other hand, uncertain future costs because only a (maybe, quite small) part of what you're running now seems applicable to the future ... and yet, you cannot stop running it, not even for a moment ... well, that’s certainly a conundrum for a business owner.

    One not-so-small element of the whole thing is that ... hardware is back, namely in the form of tablets.   And there is no clear winner.   (Hence the vital importance to us of haXe.)   A “web site” is no longer enough.   A “classic” Web 1.0 interface is a serious disadvantage, and it is rather tightly-wedged together in the name of the “mod_perl efficiency” that of course really was a major factor when dealing with smaller machines.   Therefore, I am particularly interested in hearing (here...) the real-world experiences of people who have done and/or who are now doing projects of this nature.

    Discussions are welcome; down-votes are merely annoying.   Please refrain.   I need to start a serious discussion-thread here.   (If this sort of situation does not appear to be too-important to you now, trust me, it soon will be.   Our target is moving (again) and I think we all need to collectively be discussing how to serve our various customers’ needs.

      I can suggest, and this is vague because I don't know the details at the "left behind" site, that hiring some current UI designers - and I do mean designers - along with some smart front-end developers who are up-to-date with current Javascript frameworks, will let the left-behind company both catch up and provide an excellent user experience on tablets (ok, some tablets are inherently going to provide a poor experience at the moment, but that's not your problem). This also allows you an option to get into the mobile market, if that's applicable.

      For many companies with a major web presence, the shift seems to be away from apps to sophisticated HTML 5 websites. They can look very good on just about anything, and will do a lot to provide that "oh, they must be current" kick that seems to be missing. They also allow you to not be beholden to anyone else for distribution or taking a cut of subscription fees, etc. (I love Apple, but all that's built in to their model.)

      Another alternative is to build APIs that other platforms can use, whether they're HTML 5 applications or custom apps. In addition, direct access to the APIs by customers is another possible revenue stream - selling enhanced access to the basic APIs, more features, or more capacity for a fee. Don't like our basic interface? You can build the one you want - and we offer support services at $XXX to help.

      Essentially, either the service itself has to make is obvious that it's the best, or it needs to provide something else that the competition doesn't: more support, more function, cheaper prices, ... can't make any other suggestions because I don't know the context and I am not a marketer. But the basic is "why are we better, and what should be do to emphasize that? If we're not, what can we do about that?"

        Heh.   I just had a very interesting interview with a person which quickly turned into a discussion.   In that discussion, I held out the notion that I actually don’t think that all of this present methodology that is grounded in HTML5 and JavaScript will survive the onrushing tablet/smart-phone space.

        Here we all are, talking “matter of factly” how Flash is out (good riddance) and “of course” HTML5 is in, and which “of course” JavaScript framework is going to dominate on tablets and ... all of the sudden ... “OMG!   But what if? ...”

        “It’s dejá vu all over again...”

        I think that these hand-held devices are going to bring us straight back to the application, installed individually on each device through the “automatic software update” processes that are now common.   The applications are going to be native, communicating with back-end servers perhaps using legacy-compatible JSON and/or XML:RPC protocols, but our entire “know how” investment of how to build web applications is going to be ... nullified.   “These are not ‘web’ applications.”

        Where do I think it’s going?   I think that the next talked-about thing will be cross-platform development languages, of which I am currently most familiar with and its brethren.   I don’t know if this is the language that will win, but I think it’s the correct approach.   However, there is a wee bit of a problem . . .

        The problem is that there is once again no “short line” between the present state and that one.   Once again, we have corporately made massive investments in a technology that worked, and even witnessed our actions and choices appearing to be sanctified by the biggest and most well-known names ... and then, the technology changed course again and leaves us swimming in an oxbow lake.

        Don’t know yet if I’ll get the gig, but it sure was an interesting discussion.

Re: "As software grows up" .. what do you do?
by Anonymous Monk on May 08, 2012 at 07:06 UTC
    <RAT> </RAT>

    step 1) start a bounty program 2) pay users to find bugs 3) ... 4) profit?

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