Devaluation of Technology
I have been selling IT products and services to large enterprises and organisations for more than ten years now and there is a strong trend that I am noticing with technical customers and other buyers of IT working at large Enterprises (and also consumers!):
"Hardware is commodity and software should be free and open source"
Translated: "Your hardware needs to cost next to nothing because it is in abundant supply and there is very little to differentiate it. I also would prefer not to pay you any money for your coding efforts (software) but I do want to see your code and modify it for my own use. I want you to then support my code, but only for a minor fee, so that when my bespoke code goes wrong you can support it and fix the problem (because it was obviously your code that went wrong and not mine).
The above translation is obviously an extreme example of the position I am trying to illustrate but feel free to go read the various technology forums and technology user group sites that exist across the internet and you will find this sentiment being echoed quite a bit.
When did vendors and technology innovators get into such a low position of perceived value with technical communities and users?
Some of it, I understand.
Most hardware today relies on standard components that are being manufactured on mass and according to standards set out by a few major vendors - Intel and AMD for chips, Seagate & Western Digital for disk drives, etc.... So, it is true that commoditisation should keep the cost of buying hardware pretty low and the market competitive.
Having said all this, when designing a product that uses hardware (systems), it is necessary to understand how to implement the hardware in terms of cooling and also function. Apple, for example, does a great job of using standard components and producing devices that are superior to other devices made up of similar standard components. There is still value to be added - albeit, modest.
The next part -regarding software- I really struggle with. The future of technology is squarely focused on software. Consumers define their personal devices and computers by the applications they run on them and large Enterprises define their Data Centres and their capabilities by the software they run in them. Linking them all together are the APIs - connecting, instructing and consolidating the human digital presence. Software is pretty awesome and I am amazed at how little we value it - as consumers and business users.
I understand why OS's are becoming more commoditised but applications and features shape how our hardware interacts with our customers, business partners, friends and family - there is a lot of value in that. You only have to look at examples of good software to realise this - Apple, Facebook, Google, VMWare, Salesforce, etc... (we don't pay for facebook or google - advertisers do! And we complain about the adverts!)
It could be that I am taking to shorter-term a view on this. Capitalism and competition are all about driving innovation from one point to the next - as quickly as possible. This is good for the human race as a whole!
"Hardware is commodity and software should be free and open source"
Translated: "Your hardware needs to cost next to nothing because it is in abundant supply and there is very little to differentiate it. I also would prefer not to pay you any money for your coding efforts (software) but I do want to see your code and modify it for my own use. I want you to then support my code, but only for a minor fee, so that when my bespoke code goes wrong you can support it and fix the problem (because it was obviously your code that went wrong and not mine).
When did vendors and technology innovators get into such a low position of perceived value with technical communities and users?
Some of it, I understand.
Most hardware today relies on standard components that are being manufactured on mass and according to standards set out by a few major vendors - Intel and AMD for chips, Seagate & Western Digital for disk drives, etc.... So, it is true that commoditisation should keep the cost of buying hardware pretty low and the market competitive.
Having said all this, when designing a product that uses hardware (systems), it is necessary to understand how to implement the hardware in terms of cooling and also function. Apple, for example, does a great job of using standard components and producing devices that are superior to other devices made up of similar standard components. There is still value to be added - albeit, modest.
The next part -regarding software- I really struggle with. The future of technology is squarely focused on software. Consumers define their personal devices and computers by the applications they run on them and large Enterprises define their Data Centres and their capabilities by the software they run in them. Linking them all together are the APIs - connecting, instructing and consolidating the human digital presence. Software is pretty awesome and I am amazed at how little we value it - as consumers and business users.
I understand why OS's are becoming more commoditised but applications and features shape how our hardware interacts with our customers, business partners, friends and family - there is a lot of value in that. You only have to look at examples of good software to realise this - Apple, Facebook, Google, VMWare, Salesforce, etc... (we don't pay for facebook or google - advertisers do! And we complain about the adverts!)
I also understand that innovation devalues with time but its the premise that no innovation holds any value that I struggle with. Artificial commoditisation attempts (poor imitations & IP infringement, etc) aimed at reducing profit opportunity for genuine innovators are unhealthy for the industry and the economy as a whole.
Personally, I don’t begrudge technology companies charging a premium for genuine innovation. It’s the people and companies that make money from simply having money that I take issue with – old money scenarios or companies that control and sell valuable commodities like Oil and Gold.
Why -as a society- do we begrudge intelligent 'techies' who write cool software and build great hardware from making money and getting on in the world?
These are people who invent and purvey things that would otherwise not be there had they not invented them... as opposed to taking and controlling things of value that already exist.
The irony here is that these intelligent 'techies' are actually outdoing themselves - they sit on both sides of the fence (customer/vendor) these days and they are locked in a constant cycle of devaluation - a devaluation of the one valuable property they both share (intelligence).
(Never mind trying to make a few quid along the way - we want the next innovation already! :)
On a less mundane note - loving the new Daft Punk tune, Get Lucky! (http://www.youtube.com/watch?v=5NV6Rdv1a3I) I wonder if anyone will buy it or just listen to it for free after watching the odd advert? :)
On a less mundane note - loving the new Daft Punk tune, Get Lucky! (http://www.youtube.com/watch?v=5NV6Rdv1a3I) I wonder if anyone will buy it or just listen to it for free after watching the odd advert? :)
Thanks for Reading
Chancey
The point about hardware costing as little as possible and software being the commodity is good, I think the future is lending itself even more to this. By this I mean I see hardware going back to the old dum terminal days, and cloud computing meaning the software is stored and accessed via the cloud (Google docs, Office 365, etc). Perhaps the solution is cost price hardware, free software, but the revenue being driven by cloud storage costs ?
ReplyDeleteMark - correct, this is great for the consumer. On the flipside, this industry (technology) supports thousands of jobs. No profit, no innovation, no jobs.
ReplyDeleteThe end game -in my opinion- is everything becomes free and capitalism goes away (http://lnc-chancey.blogspot.co.uk/2012/10/a-wordy-post-about-science.html)
...but we are not there yet! It is becoming increasingly harder to monetize intellectual property and in a capitalist model this is not good for jobs or investment.
Until we solve the energy conundrum, we live in a value based, profit driven world where people need jobs and in the 21st Century, those jobs need utilise knowledge workers who generate Intellectual Property
Evolution implies innovation - so what people made money out of 10 yrs ago (or even last year) is not what people will make money out of now (just look at the PC market!).
ReplyDeleteCompanies like Amazon, Google, Samsung, even Apple (although their innovation appears to be slowing down) are those who are now moving with the times, producing cheap (not yet free) hardware, and looking for the next big thing (glasses, watches, TV's), as well brand loyalty, product density, and ownership of the entire eco-system to drive profits, not just one revenue stream. The companies that struggle are those who keep doing the same thing as they've always done, or are now a little late to the table with products which copy last years innovations (Microsoft Surface, Nokia smartphones) with nothing to differentiate themselves. If Google had continued just as a search engine, I doubt they'd no longer be as successful.
We call it whole account view at work, I think supermarkets have done it for years with loss leading products.
I think relying on past ideas, software, intellectual rights no longer works - music artists did this and then filesharing came along so the artists found other ways to make cash, Apple tried to do this by relying on patents but this has not worked, and software houses did this and the clever ones have found ways to evolve (free software + advert funding, in-game purchases, upgrade options, etc).
So yes, I agree those people with the knowledge need to make money - but maybe not out of the things they did last year, they need to think more entrepreneurial.
Absolutely agree with everything you said. My only concern is that we do not operate in a perfect market economy. If we did, innovation and fast paced product design would be king. There are too many international legal loop holes (mostly China related) and business tactics that erode the capitalist incentives to innovate (at that pace). In simplistic terms (carrot and stick), I am suggesting that the stick is getting heavier (i.e. market forces to innovate) but the carrot is getting smaller (due to copy cats, poor IP law and technical folk devaluing their own work through open source initiatives). If incentives are not there for innovation you will end up with JUST Google, Amazon and Apple. It is very tough for start ups right now. I am not saying this is necessarily a bad thing, I am just wondering where all the clever programmers are going to go work next? (Hunters, to farmers, to factory workers, to knowledge workers.... to.... ?)
ReplyDeletethey will code apps for Android, iOS, maybe Firefox, probably not Windows 8 :)
ReplyDeletenot if they are not getting paid for it they won't - and there is only so much adverts will pay for! (P.S. What is this Windows 8 you speak of?)
ReplyDelete