Intellectual property protection suddenly stops. What do software developers do?

[VetLegion]

OzzyKP, the image is awsome. I want to post it somewhere else, who should I credit?

[Saras]

Originally posted by OzzyKP
Wow, I spent way too much time designing that damn screen shot for it to be totally ignored by everyone here.

Actually, it was so obviously cool that I didn't think you would NEED praise . Anyway, Ozzy

[VetLegion]

Ah, you made it Ozzy? Missed that. It's excellent

[OzzyKP]

hehe, finally I get some recognition.

Thanks guys, go ahead and post it where you will.

[JohnT]

A "pretty penny"? That's a load of horsesh*t.

You can make a tiny bit of money, it's completely comical compared to real software companies.

And the only reason they make money on support are their products are so poorly engineered in the first place so as to require support -- and where is the incentive to improve the ease of use and functionality of the product when you get paid to support it?

I'm rather stunned that a person who worked/works for IBM is decrying the value that support brings to a company. My freakin' God, support was and is IBM's Software's bread and butter - it's what they do.

Here, a quote from Page 5 of International Business Machine's 2004 10-K (released, Feb 2005):

Software (a division of IBM, JT) consists primarily of middleware and operating systems software. Middleware software enables clients to integrate systems, processes and applications across their enterprises. Middleware is designed to be the underlying support for applications provided by independent software vendors (ISVs), who build industry- or process-specific applications according to open industry standards. Operating systems are the engines that run computers. Approximately 40 percent of external Software revenue relates to one-time charge (OTC) arrangements, whereby the client pays one up-front payment for a lifetime license. The remaining annuity revenue consists of both maintenance revenue sold with OTC arrangements, as well as software sold on a monthly license charge (MLC) arrangement. Typically, arrangements for the sale of OTC software include one year of maintenance. The client can also purchase ongoing maintenance after the first year, which includes product upgrades and technical support.

60% of IBM's software revenues come from long-term licenses and maintenance. Is it because IBM sells crappy software? I don't know, but I don't think so - I'm pretty sure they know their **** and have known it for years: They recognize that selling their support and maintenance of business and business machines is a major component of their income statement and cash flows.

You? You would have just given away $10 billion in business.

Revenue from maintenance, unspecified upgrades and technical support is recognized over the period such items are delivered.

(p. 50)

[JohnT]

Here's the income statement from Epicor Inc, a $250m/year developer of CRM and accounting software for the small-mid size business market:

Revenues: (2004)

License fees: $61,869
Consulting: $56,891
Maintenance: $103,967
Other: $3,483
Total revenues: $226,210

Again, maintenance is a larger generator of revenues than licensing fees.

[aneeshm]

Originally posted by Asher

Switching to Linux isn't as easy as people want you to believe.

It incurs a huge one-time cost and productivity loss while you re-train people, and the actual operating costs for the average company aren't much lower.

This is why Urban Ranger has predicted the downfall of Windows for ~5 years now, every year. And every year, MS sells more copies.

First - such predictions should not be made . UR thinks that technical superiority will overshadow everything else , but that is not true , Changing perceptions takes time , specially when the people you have to deal with are PHBs .

Second - have you accounted for the fact that the growth of MS may be due to the growth of the market ?


As for the switching part - I found it very easy , and I now use Windows only for games that are not developed for Linux , or not ported to it . When a game runs on both Windows and Linux , I have found consistently better performance under Linux .


As for the re-training - how much re-training exactly do you need to move from MS Office to OpenOffice.org ? Only very few people need to be really re-trained , because they are the only ones using advanced features which differ in detail between the two office suites .

[JohnT]

Please, I'm not going to put my company's IT services in the hands of a bunch of disassociated hobbyists.

[aneeshm]

Originally posted by JohnT
Please, I'm not going to put my company's IT services in the hands of a bunch of disassociated hobbyists.

Then don't . We're not forcing or even insisting you do . We consider it your loss , not ours . It's not like the hobbyists need you . The goal is to get the work the hobbyists produce to be so good that in time , you will need them , and will have a great disadvantage ( opportunity cost ) if you don't use the work they have produced .

[Asher]

Originally posted by JohnT
I'm rather stunned that a person who worked/works for IBM is decrying the value that support brings to a company. My freakin' God, support was and is IBM's Software's bread and butter - it's what they do.

Here, a quote from Page 5 of International Business Machine's 2004 10-K (released, Feb 2005):

Software (a division of IBM, JT) consists primarily of middleware and operating systems software. Middleware software enables clients to integrate systems, processes and applications across their enterprises. Middleware is designed to be the underlying support for applications provided by independent software vendors (ISVs), who build industry- or process-specific applications according to open industry standards. Operating systems are the engines that run computers. Approximately 40 percent of external Software revenue relates to one-time charge (OTC) arrangements, whereby the client pays one up-front payment for a lifetime license. The remaining annuity revenue consists of both maintenance revenue sold with OTC arrangements, as well as software sold on a monthly license charge (MLC) arrangement. Typically, arrangements for the sale of OTC software include one year of maintenance. The client can also purchase ongoing maintenance after the first year, which includes product upgrades and technical support.

60% of IBM's software revenues come from long-term licenses and maintenance. Is it because IBM sells crappy software? I don't know, but I don't think so - I'm pretty sure they know their **** and have known it for years: They recognize that selling their support and maintenance of business and business machines is a major component of their income statement and cash flows.

You? You would have just given away $10 billion in business.

Revenue from maintenance, unspecified upgrades and technical support is recognized over the period such items are delivered.

(p. 50)

The vast majority of this "support" comes from z/OS (OS/390) customers, and that's not really "support"...they don't own the hardware, they lease the machines and pay insane amounts of money for the privledge of doing so.

You're confusing support (which is what Red Hat makes its pidly money on) and the bigger picture of long-term leasing arrangements in IBM's mainframe group, which is a goldmine. Not as much as it was before (pre-1990) but it's still a cash cow.

[Asher]

Originally posted by JohnT
Here's the income statement from Epicor Inc, a $250m/year developer of CRM and accounting software for the small-mid size business market:

Revenues: (2004)

License fees: $61,869
Consulting: $56,891
Maintenance: $103,967
Other: $3,483
Total revenues: $226,210

Again, maintenance is a larger generator of revenues than licensing fees.

Epicor makes extremely complicated software that integrates itself with existing infrastructures (like factories, fabrication plants, pharmaceuditcals, etc). It's a very specialized, complicated software company that makes most of its money on sending people to integrate their software with applications and processes that were not intended to support them.

It's not that common in a software company to be in their position,and it's far more than just charging for "support" where you pay $300/hr to talk to some kid on the phone on how to add a new email account to Thunderbird.

[Asher]

And that's a bunk comparison anyway, there are zero open source alternatives to the kind of software Epicore makes.

Open source projects are usually created when there are lots of public need for it, and companies like Epicore make a killing selling specialized software few people need, but those that do would pay a lot for it.

[Asher]

Originally posted by aneeshm
Second - have you accounted for the fact that the growth of MS may be due to the growth of the market ?

The growth of the market in the developing world? I thought that was Linux's strong point.

As for the switching part - I found it very easy , and I now use Windows only for games that are not developed for Linux , or not ported to it . When a game runs on both Windows and Linux , I have found consistently better performance under Linux .

How can you find it easy if you still need to use Windows for some of your uses? That's not switching, that's adding an alternative in addition to Windows. And that's not viable for a company.

Further, lots of companies have lots of customized software that runs on Windows, not Linux. This is why IBM isn't anywhere NEAR close to "switching to Linux" as promised.

As for your game performance under Linux, I find that surprising. For every case I've seen of game performance, Linux is substantially slower.


(source: http://www.linuxhardware.org/article...46&mode=thread)

As for the re-training - how much re-training exactly do you need to move from MS Office to OpenOffice.org ? Only very few people need to be really re-trained , because they are the only ones using advanced features which differ in detail between the two office suites .

OpenOffice isn't the only product used by companies...

[LDiCesare]

Sorry if I talk again about the OP, but Brad Wardell sold Galciv without any kind of CD-protection in the U.S, and Stardock made a lot of money (compared to what they expected) regardless. Smaller games like Dominions II have no CD protection either but get sold anyway.
As for bigger software, I develop CATIA, which is sold an insane amount of money by IBM. This piece of software gets sold and also pirated. You can get copies of it on the net if you want to. But the firm still makes money, because its customers need the assurance that someone can be accounted for in case of problem, require support, hot fixes, new features and services. As far as I know most of the pirates are people who want/need to work after hours and get a pirate copy in order to work at home (since they can't purchase the legal software). So CD protection and other IP protections are definitely not hindering the sales to the point of harming software industry.

[Asher]

The people who buy CATIA are usually companies, and companies almost always buy legit copies. Not necessarily because of the support, but because they get in a LOT of trouble when it's found to be illegal.