The Software Industry
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Smarty pants ;) My point is that it's a free market. Don't like the price? Don't buy it. Of course we can get into illegal cornering of markets and price fixing, etc. Did you design a system that wedded you to the evil prince? Fix it. Look at MS - they want to sell me a subscription to office? 99.999% I don't use? Really? When companies do this, they are circling the wagons because their cheese is about to be moved. Strongly recommend this book: https://www.amazon.com/Moved-Cheese-Amazing-Deal-Change/dp/B0049JMZ4W/ref=asc_df_B0049JMZ4W/?tag=hyprod-20&linkCode=df0&hvadid=693308329801&hvpos=&hvnetw=g&hvrand=17849836759272649514&hvpone=&hvptwo=&hvqmt=&hvdev=c&hvdvcmdl=&hvlocint=&hvlocphy=9010778&hvtargid=pla-1952829245456&psc=1&mcid=504da9c7808a3f22b099ede91ed84825&gad_source=1[^] There are limits to how deep you want to gouge, I'll grant you that. But if the OP is upset, they need to take it up with senior leadership.
Charlie Gilley “They who can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety.” BF, 1759 Has never been more appropriate.
charlieg wrote:
Smarty pants
Guilty. :laugh:
charlieg wrote:
My point is that it's a free market. Don't like the price? Don't buy it
Right, but that has nothing to do with greed, which was what I was talking about. If anything is more do with supply and demand. Which are indirectly based on fear and greed but that aren't directly the same thing.
charlieg wrote:
When companies do this, they are circling the wagons because their cheese is about to be moved.
I'm not sure what that metaphor means. I assume it means they're getting desparate and if so, would lend credence to my original point you seem to be trying to discredit. :~ Side note, it's in poor taste for unsolicited book recommendations. It's presumptuous and assumes I know little of the subject. I can promise you, nothing could be further from the truth.
charlieg wrote:
But if the OP is upset, they need to take it up with senior leadership.
This has nothing to do with greed being the driving factor behind a lot of new pricing models.
Jeremy Falcon
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Vivi Chellappa wrote:
What justifies differential pricing based on number of users?
You are comparing apples with oranges. When you watch TV you do not use it to make money. When you use someone's software product, in most cases it is to keep your business going. So if you profit from using that software then maybe the owner should get a share of those profits.
So if I buy a truck for my delivery service, is it your contention that I should pay a royalty or license fee to the truck's manufacturer?
Freedom is the freedom to say that two plus two make four. If that is granted, all else follows. -- 6079 Smith W.
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So if I buy a truck for my delivery service, is it your contention that I should pay a royalty or license fee to the truck's manufacturer?
Freedom is the freedom to say that two plus two make four. If that is granted, all else follows. -- 6079 Smith W.
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Software is a product. Much like TV, automobile, washing machine, etc. The latter are tangible while software is intangible but that is not an important difference. Once upon a time, when you bought a software, you paid one price for it, no matter how many persons in the purchaser company used it. Then they decided to charge according to the power of the processor the purchaser company used. This is like saying you have a larger living room and so the TV is higher priced. Then they decided to charge price/user. This is akin to the price of the TV or washing machine being dependent on how many persons are in the household. Now, Oracle has gone one step further and its Java licenses are based on the number of employees in the purchaser company, including janitors or messenger boys they may employ. If a customer refuses to accept the new terms, which yield hundreds of thousands if not millions of dollars more in revenue to Oracle, Oracle is threatening an audit of those companies to determine if any of the contractual terms are violated by the purchaser. Companies have sprung up to assist the purchasers in questioning the findings of these audits. What makes software different from common household goods such as TV, automobiles, etc? What justifies differential pricing based on number of users? Other than the greed of software vendors.
Vivi Chellappa wrote:
Once upon a time, when you bought a software, you paid one price for it, no matter how many persons in the purchaser company used it.
When was that exactly? Or perhaps you definition of use is limited. When one bought Lotus 1-2-3 it installed itself in such a way that it could only be installed on one computer. I would be very surprised if the early payroll systems (big iron) had contracts that allowed one to install it on other computers say at a different company. By seat licenses are absolutely not new.
Vivi Chellappa wrote:
Then they decided to charge according to the power of the processor the purchaser company used.
So? Why is that surprising? The point of companies is to make money. So they learn new ways to make money they do it. Checking luggage on passenger airlines used to be free. But that doesn't mean that they didn't charge for cargo shipping. You did learn about steam ships right? Steerage class passengers didn't have a lot of fun.
Vivi Chellappa wrote:
Oracle is threatening an audit of those companies to determine if any of the contractual terms are violated by the purchaser.
Eh? Software companies have been suing other companies for licensing violations for decades. I think there is even a company whose sole purpose is doing that. They would and did take the offending company to court, win a judgement, then conduct an audit. The offending company would then have to buy the number of licenses that they did not have and pay a substantial penalty. And somewhat related Sun, the original owner of Java, sued Microsoft and won because Microsoft created and distributed a non-compliant Java version for Windows. Microsoft violated the terms of the license.
Vivi Chellappa wrote:
If a customer refuses to accept the new terms,
Or the company can use something else. You do know there is an open source version of Java right?
Vivi Chellappa wrote:
such as TV, automobiles, etc?
Well for one thing because they are tangible. But do you know how an automobile lease works right? You know the ones with the 'lower' cost? Or what about companies that rent household furnishings? Including TVs. Actually I think I saw a place that rents hi
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My question was: Should software be priced differently than ordinary goods? What is the justification for it? The production process is similar. An automobile manufacturer has a design bureau to design a new vehicle; production engineers to manufacture the vehicle; test engineers who test the vehicle for safety, compliance with various laws, etc; and a marketing and sales group to advertise the new vehicle and sell it through dealerships; and a service organization that coordinates warranty repairs through the dealership. A software company has senior developers who design the software; development engineers who write the code; test engineers who test the functionality of the software; and maintenance engineers who perform fixes when errors are discovered. The production process is far easier as one has to only copy hundreds of CDs as opposed to an automobile where several body parts have to be pressed out of sheet metal; the body has to be welded together and painted; the engine has to be cast and machined; the transmission has to be forged and machined: and the entirety of parts have to be brought together in an assembly line to be assembled into a complete vehicle. But an automobile is not priced on the basis of whether it is a single user vehicle or to be used by a family of six. Why the difference then except that the software guys have the customer by the gonads and are willing to squeeze hard to extract money?
Vivi Chellappa wrote:
Should software be priced differently than ordinary goods?
You mean like John Deere requiring that their tractors only be serviced by their dealers? Or terms of use on almost any electronics that said the warranty was violated if anyone but a licensed service center worked on it? Or labeling exactly the same printer with a different name, and charging more, based on whether it would be serviced for free if something went wrong versus charging to fix for it? What about charging for an extended warranty for a refrigerator because it only has a one year warranty when refrigerators commonly last more than 10 years.
Vivi Chellappa wrote:
But an automobile is not priced on the basis of whether it is a single user vehicle or to be used by a family of six.
But on the other hand a rental car usually (always?) states that only the renter can drive it. Doesn't matter whether it is a friend or a spouse.
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So, if I buy a truck from General Motors for my freight carrying business, I should share my profits with GM?
If that is how they sell it yes. Did you know you can get a 'fleet' credit card for your business? Like a regular credit card but for commercial businesses which do in fact use vehicles as part of the business. The company gets benefits because the card is used, via the contract for the card, in certain ways. Such as where they buy gas and how the vehicle is serviced. Same is true for large companies where the employees have company expenses. The company gets money back depending on things like how the employees travel, where they stay, where they eat and even office expenses.
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In the past (and even now), there was/is an annual maintenance contract with the software vendor that paid for upgrades and bug fixes. It is like buying an extended warranty for your car. My question remains: what justifies per-user pricing? PS. I brought in Oracle as an example of egregious business practices that is enabled by per-user pricing.
Vivi Chellappa wrote:
In the past (and even now), there was/is an annual maintenance contract with the software vendor that paid for upgrades and bug fixes.
Not sure you mean by "past" but no that is not true. Big iron applications, far as I know had contracts. The contract covered the iron and the software. For big iron 3rd party software (like Oracle) I suspect there were contracts also. For personal computers when you bought Lotus 1-2-3, it was yours. After a bit software of some sorts offered an upgrade which meant you paid less if you had the prior version. Some companies did that. That was true regardless of whether it was personal use, small business or large business. The only 'contracts' associated with that was that if you bought enough copies you could negotiate a lower price. There was no service at all.
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Back in the 60s I worked for Shell-Mex and BP. We had two computer centres, one in Manchester (Wythenshawe) and one in Hemel Hempstead. Once a week we needed to exchange data between the two. So each centre loaded all the data onto 3/4 inch magnetic tapes, boxed them up and popped them into a taxi. The two taxis then made their way to a rendezvous point in Birmingham where they exchanged boxes. The new tapes were then delivered to their destinations. Our centre in Wythenshawe had earlier (i.e. less advanced) systems than Hemel, so if they forgot and wrote their tapes in "high density" we could not read them. Happy days!
So big iron. Presumably the companies had a full service contract with the iron company and quite likely only ran software from those companies as well. Did the employees of your company run those updates or did the employees of the iron company run the updates?
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The biggest difference between Products (TV, Automobile, Washing Machine) and software is that software is not sold. Software is licensed. You do not own it. You own the right to use it under the terms of the licensing agreement. If you do not agree with the terms of the license you are free to negotiate with the software owner or go find a different software solution with licensing terms that are more to your liking (like open source alternatives). The problem that software owners/vendors have is that software is easy to install and run on most computing equipment. Need an extra word processor for a new employee, just install the one you have on that employee's new PC. That is why most software installs try to phone home to the mother company to validate that the software license for it is not already bound to a different PC. Need more flexibility in the international nature of your multi country corporation. Then get an Enterprise License and you are free to use software as much as you want. Of course, you are going to pay an order of magnitude more for the license than a single user license. Have a small office with a tiny server and you don't want to pay for "big iron" prices. Then there are small server (per core) pricing. You can compare hard good products with software products only when they can "pop into existence" by simply installing a copy of them in another location. Need a 2nd TV, just install a copy of your TV in the new room, or friend's house. But I do agree that Oracle is the example of hardnosed licensing. It's the reason why almost everyone that is doing any serious development with Java software products is using OpenJDK development. If you are an enterprise and using Oracle as a database then you are stuck. You are already paying an arm and leg for licensing and support.
Gary Stachelski 2021 wrote:
The biggest difference between Products (TV, Automobile, Washing Machine) and software is that software is not sold. Software is licensed.
But not that simple. Car leasing. Backhoe rental. Not to mention of course 'software' these days is also confused with 'service'. You can have Microsoft Office as a product or a service. If I go to a bar, buy a beer and watch a sports match am I getting a service or a product?
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Back in the 60s I worked for Shell-Mex and BP. We had two computer centres, one in Manchester (Wythenshawe) and one in Hemel Hempstead. Once a week we needed to exchange data between the two. So each centre loaded all the data onto 3/4 inch magnetic tapes, boxed them up and popped them into a taxi. The two taxis then made their way to a rendezvous point in Birmingham where they exchanged boxes. The new tapes were then delivered to their destinations. Our centre in Wythenshawe had earlier (i.e. less advanced) systems than Hemel, so if they forgot and wrote their tapes in "high density" we could not read them. Happy days!
Around 1980 I first heard the saying, "A truckload of magnetic tape tape has a tremendous bandwidth". Later, I learned that the saying is several years older. I'd like to do a real, up to date calculation based on, say 128 TB SD cards. What is the weight of an SD card? (I don't have a scale handling those ranges!) How much can you load into a truck? 20 tons? 40 tons? I guess that a container ship of SD cards would beat the combined capacity of all the Trans-Atlantic optic fibers.
Religious freedom is the freedom to say that two plus two make five.
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Vivi Chellappa wrote:
Once upon a time, when you bought a software, you paid one price for it, no matter how many persons in the purchaser company used it.
When was that exactly? Or perhaps you definition of use is limited. When one bought Lotus 1-2-3 it installed itself in such a way that it could only be installed on one computer. I would be very surprised if the early payroll systems (big iron) had contracts that allowed one to install it on other computers say at a different company. By seat licenses are absolutely not new.
Vivi Chellappa wrote:
Then they decided to charge according to the power of the processor the purchaser company used.
So? Why is that surprising? The point of companies is to make money. So they learn new ways to make money they do it. Checking luggage on passenger airlines used to be free. But that doesn't mean that they didn't charge for cargo shipping. You did learn about steam ships right? Steerage class passengers didn't have a lot of fun.
Vivi Chellappa wrote:
Oracle is threatening an audit of those companies to determine if any of the contractual terms are violated by the purchaser.
Eh? Software companies have been suing other companies for licensing violations for decades. I think there is even a company whose sole purpose is doing that. They would and did take the offending company to court, win a judgement, then conduct an audit. The offending company would then have to buy the number of licenses that they did not have and pay a substantial penalty. And somewhat related Sun, the original owner of Java, sued Microsoft and won because Microsoft created and distributed a non-compliant Java version for Windows. Microsoft violated the terms of the license.
Vivi Chellappa wrote:
If a customer refuses to accept the new terms,
Or the company can use something else. You do know there is an open source version of Java right?
Vivi Chellappa wrote:
such as TV, automobiles, etc?
Well for one thing because they are tangible. But do you know how an automobile lease works right? You know the ones with the 'lower' cost? Or what about companies that rent household furnishings? Including TVs. Actually I think I saw a place that rents hi
jschell wrote:
By seat licenses are absolutely not new.
A long time ago, in the early 1980s, I talked with one guy whose engineering project needed the power of a VAX-780. They needed to write a couple reports, and the natural tool to consider was the VAX 'All-in-1' office automation package. (AI1 was also referred to as 'All-in-several' - the integration of the tools were less than perfect!) AI1 was priced by the capacity of the machine. Their 780 was the most powerful VAX around; DEC claimed it could handle 100 simultaneous AI1 users, and priced the software accordingly. Their project had 3 members, one of them were the to do the major part of the documentation work. They found a cheaper solution, though: Buying another VAX, a 730, plus a 1-user AI1 license was together significantly cheaper than buying the same software for the 780 they already had. So you are certainly right: Seat licenses are ages old.
Religious freedom is the freedom to say that two plus two make five.
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Vivi Chellappa wrote:
Once upon a time, when you bought a software, you paid one price for it, no matter how many persons in the purchaser company used it.
When was that exactly? Or perhaps you definition of use is limited. When one bought Lotus 1-2-3 it installed itself in such a way that it could only be installed on one computer. I would be very surprised if the early payroll systems (big iron) had contracts that allowed one to install it on other computers say at a different company. By seat licenses are absolutely not new.
Vivi Chellappa wrote:
Then they decided to charge according to the power of the processor the purchaser company used.
So? Why is that surprising? The point of companies is to make money. So they learn new ways to make money they do it. Checking luggage on passenger airlines used to be free. But that doesn't mean that they didn't charge for cargo shipping. You did learn about steam ships right? Steerage class passengers didn't have a lot of fun.
Vivi Chellappa wrote:
Oracle is threatening an audit of those companies to determine if any of the contractual terms are violated by the purchaser.
Eh? Software companies have been suing other companies for licensing violations for decades. I think there is even a company whose sole purpose is doing that. They would and did take the offending company to court, win a judgement, then conduct an audit. The offending company would then have to buy the number of licenses that they did not have and pay a substantial penalty. And somewhat related Sun, the original owner of Java, sued Microsoft and won because Microsoft created and distributed a non-compliant Java version for Windows. Microsoft violated the terms of the license.
Vivi Chellappa wrote:
If a customer refuses to accept the new terms,
Or the company can use something else. You do know there is an open source version of Java right?
Vivi Chellappa wrote:
such as TV, automobiles, etc?
Well for one thing because they are tangible. But do you know how an automobile lease works right? You know the ones with the 'lower' cost? Or what about companies that rent household furnishings? Including TVs. Actually I think I saw a place that rents hi
jschell wrote:
And somewhat related Sun, the original owner of Java, sued Microsoft and won because Microsoft created and distributed a non-compliant Java version for Windows. Microsoft violated the terms of the license.
That was a good thing! It caused MS to develop C#, and I definitely prefer C# over Java.
Religious freedom is the freedom to say that two plus two make five.
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Software is a product. Much like TV, automobile, washing machine, etc. The latter are tangible while software is intangible but that is not an important difference. Once upon a time, when you bought a software, you paid one price for it, no matter how many persons in the purchaser company used it. Then they decided to charge according to the power of the processor the purchaser company used. This is like saying you have a larger living room and so the TV is higher priced. Then they decided to charge price/user. This is akin to the price of the TV or washing machine being dependent on how many persons are in the household. Now, Oracle has gone one step further and its Java licenses are based on the number of employees in the purchaser company, including janitors or messenger boys they may employ. If a customer refuses to accept the new terms, which yield hundreds of thousands if not millions of dollars more in revenue to Oracle, Oracle is threatening an audit of those companies to determine if any of the contractual terms are violated by the purchaser. Companies have sprung up to assist the purchasers in questioning the findings of these audits. What makes software different from common household goods such as TV, automobiles, etc? What justifies differential pricing based on number of users? Other than the greed of software vendors.
Movies, to be shown in movie theaters, are products. Whether one or a hundred persons view the movie does not affect the production cost of the movie. So it makes no sense to require the second and following viewers to pay a ticket to view the movie. Especially if they all view in in the same theater, which just sits there anyway.
Religious freedom is the freedom to say that two plus two make five.
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Gary Stachelski 2021 wrote:
The biggest difference between Products (TV, Automobile, Washing Machine) and software is that software is not sold. Software is licensed.
But not that simple. Car leasing. Backhoe rental. Not to mention of course 'software' these days is also confused with 'service'. You can have Microsoft Office as a product or a service. If I go to a bar, buy a beer and watch a sports match am I getting a service or a product?
All of the software on my current PC is bought as a product, or downloaded free of charge/service. I do pay a monthly fee for my internet connection, but that comes with no software at my PC. One common way to pay for internet (and broadcasting) services is to let the ads persuade you to buy more of the stuff advertised - part of what you pay (sometimes, a significant part) goes to run the service. I don't want to be persuaded to buy lots of things I don't need. The stuff I need, I buy, ads or not. One problem: When I buy a product, a significant part of the price goes for producing internet services and TV shows that I could care less about. I don't want my money to be spend on that garbage! (some of it, at least) But the is no way to opt out, as long as I need the stuff I buy and cannot / will not stop buying it just to keep my money out of those production budgets. I really liked it when we had to pay a license to watch TV, one with no commercials. I could opt out, and I did: I never owned a TV set. I am forced to pay for a lot of services and series that I don't want; it happens nearly every time I pull my card or open my billfold. Therefore, I have a clean conscience when I use an ad blocker, so that I do not spend even more money on services and series that I do not want. In the old days of paper newspapers, they often had advertising inserts, printed separately so you could take them out and throw in the wastepaper basket without looking at them. That's what I did. The paper equivalent to today's ad blocker. Criticizing me for using an ad blocker is like criticizing me for throwing the ad insert into the wastepaper basket in the old days.
Religious freedom is the freedom to say that two plus two make five.
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Gary Stachelski 2021 wrote:
The biggest difference between Products (TV, Automobile, Washing Machine) and software is that software is not sold. Software is licensed.
But not that simple. Car leasing. Backhoe rental. Not to mention of course 'software' these days is also confused with 'service'. You can have Microsoft Office as a product or a service. If I go to a bar, buy a beer and watch a sports match am I getting a service or a product?
Interesting. Not sure I get the connections between software licensing and the examples you provided. Car Leasing: You agree to pay for the depreciation of the car over the length of time or mileage (usage) for the period of the lease. You agree to be responsible for damage to the vehicle and must purchase insurance to protect against damage that occurs while the vehicle is in your possession but the title to the vehicle remains with the company doing the leasing. Backhoe rental: again the title to the Backhoe remains with the rental company but you agree to the rental terms that provide a certain amount of income to the owner of the Backhoe. The Backhoe remains on the books of the owning company and they get to take depreciation and wear and tear costs against their income generated by the asset. As to the Bar: If you can go into the bar and watch the game without purchasing a beer then it is a free charity event, if you must purchase at least one beer to remain and watch the game, then the cost of the beer is the entry cost of the service that is being provided. Beer plus game plus the ambiance of the pub. Sorry, but I am confused. Not the first time though.
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So big iron. Presumably the companies had a full service contract with the iron company and quite likely only ran software from those companies as well. Did the employees of your company run those updates or did the employees of the iron company run the updates?
This was in the days before magnetic drums and disks, and main memory was 16K of magnetic cores. Every morning we would reload the OS from the master magnetic tape, before starting the commercial programs. When the manufacturer created an update they would just send us a new tape. All input data came from punched paper tape or cards, and was processed in batches. One of the joys of the night shift was getting all the invoices printed, decollated and cut, ready for delivery. We could then repair to the canteen and play cards until the end of the shift.
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Interesting. Not sure I get the connections between software licensing and the examples you provided. Car Leasing: You agree to pay for the depreciation of the car over the length of time or mileage (usage) for the period of the lease. You agree to be responsible for damage to the vehicle and must purchase insurance to protect against damage that occurs while the vehicle is in your possession but the title to the vehicle remains with the company doing the leasing. Backhoe rental: again the title to the Backhoe remains with the rental company but you agree to the rental terms that provide a certain amount of income to the owner of the Backhoe. The Backhoe remains on the books of the owning company and they get to take depreciation and wear and tear costs against their income generated by the asset. As to the Bar: If you can go into the bar and watch the game without purchasing a beer then it is a free charity event, if you must purchase at least one beer to remain and watch the game, then the cost of the beer is the entry cost of the service that is being provided. Beer plus game plus the ambiance of the pub. Sorry, but I am confused. Not the first time though.