The Software Paradox

by Stephen O’Grady

Software is more important than ever today and yet its commercial value is steadily declining. Microsoft, for instance, has seen its gross margins decrease for a decade, while startups and corporations alike are distributing free software that would have been worth millions a few years ago. Welcome to the software paradox. In this O’Reilly report, RedMonk’s Stephen O’Grady explains why the real money no longer lies in software, and what it means for companies that depend on that revenue. You’ll learn how this paradox came about and what your company can do in response. This book

Genres: Business, Technology, Programming, Nonfiction, Software

62 pages, ebook

First published May 18, 2015

About the author

Stephen O’Grady is a co-founder of the developer-focused technology analyst firm, RedMonk. Regularly cited in publications such as the New York Times, BusinessWeek, and the Wall Street Journal, Stephen’s work revolves around understanding developer needs and trends and working with businesses to help them work more effectively with the New Kingmakers. Although his birth certificate says New York City, Stephen is a Red Sox fan, born and raised. A graduate of Williams College, Stephen lives in Midcoast Maine with his wife.

Reviews

[Jose Papo · Rating 5 out of 5]

If you want to understand what is happening now in the tech world you need to read this book. SaaS, Cloud, subscriptions and focus on services and not products are the new normal for tech.

[Elias · Rating 4 out of 5]

Interesting short book.

The main theme is how software is becoming more and more important, and yet its commercial value keeps decreasing: hence, the software paradox.

Companies that sell software are increasingly (and wisely, the book argues) shifting to subscription-based models or offering it as a service. Software is still important, but it's more of a means to an end. For many companies the value is in data collected along the time and not in the software itself (which many companies make it freely available and open sourced).

[Vikram Chalana · Rating 4 out of 5]

Software industry trends outlined - cloud (saas), open source, and full stack offerings. Some interesting insights about the urgency with which software companies need to adapt.

[Eugene · Rating 5 out of 5]

the book shows the way the software business will evolve into and the role of the open source movement and big data.

[Dave Neary · Rating 4 out of 5]

The Software Paradox is the surprising observation that as software has become increasingly important across every industry, the money that can be made from the sale of software has been trending progressively down. Companies are more profitable making money with software rather than making money from software. In this essay, Stephen justifies his thesis, provides a number of examples of the paradox in action, and ends with some advice for companies on how to succeed in a world where the paradox exists.

[James Singizi · Rating 3 out of 5]

This book captures the details of a phenomenon that can no longer be overlooked. Software is an essential part of computing but its value can no longer be ascertained independent of other components such as hardware. The era of selling software as a product is behind us and it is important for organisations to develop innovative means of profiting from software.

Stephen O’ Grady details all the important history and statistics that makes it clear that we are heading towards a dispensation where software will cease to be a product that can be sold on its own but rather an enabler of other business avenues (but there are still some exceptions). The SaaS and Paas models are undoubtedly the way to go for organisations and startups to realize profit form software. The case study of Nest was of particular interest to me.

This is a great book and for those wishing to create IT startups i believe this book will provide tremendous insight on how the industry is performing and responding to change.

[Sergey · Rating 3 out of 5]

I can't say this is a book, more of the brochure or even several articles.

Book related to crucial idea in this days, in my opinion started around 2012 - "commercial value of software is declining and tends to zero, while importance of software as instrument and backbone of modern companies tends to infinity" - that is The Software Paradox.

Modern user wants to get a basic version for free and pay only for extended features. Thus 2 points:
- making software in engineering terms is tremendously easy - many free available tools - os, libraries, frameworks, etc.
- making software actually score on commercial value is hard - you need funds for creating infrastructure and extending it. (As of date of writing review Amazon is bigger than WalMart with huge AWS profit http://www.wired.co.uk/news/archive/2...)

[Jonah Andersson · Rating 4 out of 5]

Informative and interesting book about the Internet giant companies of this modern generation. The challenges, past and the future of software products ... to the future of cloud-based software applications.

[Robert Christie · Rating 4 out of 5]

Nice model. Useful for buyers and sellers of software.

[Kristian Kalsing · Rating 4 out of 5]

A must-read for anyone in the software industry. Times are changing. Again.

[Patrick Pilz · Rating 4 out of 5]

You can read this book in merely an hour. It tells the story of software from an economical way and predicts the end of the the standard software business as we know it.

[Muhammad Ali · Rating 4 out of 5]

Software companies now need to diversify their product offering to stay afloat in the market.

[Cody Uhi · Rating 1 out of 5]

This book is best read from the perspective of a large software corporation, rather than from the perspective of an individual developer or a startup. Its claim that software is "falling" also has to do solely with its financial viability as the primary product to be sold by a large corporation. With that in mind, it takes a narrow approach to explain how software stood as a marketable product in 2015 in comparison to the glory days of Microsoft's peak. The book has aged slightly, especially with the boom in startup software companies' presence in the tech space since 2015. The advice for companies remains viable, however, when suggesting things to keep in mind for business models.
If you're a fan of startups and open-source software, you may be a little put off by how open-source work is portrayed in the book (as I was). This book is about money. It does not acknowledge the good things in education, human rights, and entrepreneurship that open-source software has powered. So unless you're coming here to read about making money and you're in the position in a software company to make decisions about business models, this book might feel a bit off (especially with the claim that software is in a falling period).

[AJ Ostrow · Rating 3 out of 5]

Focused on the largest companies and lacking insight. At least he calls developers the 'New Kingmakers'.

[Colle Owino · Rating 5 out of 5]

I honestly love this book. It's short and straight to the point. Being someone who works in the software business makes me kinda sad that our our industry is almost past it's golden days.

[Aleš Roubíček · Rating 4 out of 5]

Hodně zajímavá kniha, která mi připomněla jak jsme se snažil přesvědčit vedení firmy, že nový produkt, který vyvýjíme nebudeme schopný prodávat jako krabici, ale musí fungovat jako SaaS. Ačkoliv jsem měl i lehkou podporu z obchodu, tak se stejně pokračovalo v krabicáku a raději se zaměřili na implementaci CRM, kde se utopila nejen spousta peněz a dobrých lidí na spoustu měsíců, ale delivery nebyla nakonec žádná. Jak jsem čekal a předpovídal. Snad vám přečtení této knihy pomůže být prozíravější. ;)

Taky jsem si u čtení uvědomil jednu zásadní věc. Na vývoj software mám určitý pohled, který spoustě lidí přijde jako extrémní, neslučitelný s tím jak oni tvoří a udržují kód. Ta věc je ta, že já celou svou kariéru tvořím služby a to i když dělám krabičák. V knize je ten rozdíl hezky popsán. To co já cítím tak nějak intuitivně, tak tam je to popsáno i pro lidi co znají jen ekonomické poučky.

[Monty Mitra · Rating 4 out of 5]

A quick read. If you follow the industry, it's not presenting any new insight but it does present them in a manner that helps organize your thinking about the value of software in a changing global industry/economy.

[Baluananth S]

A good read for high school students. Might add some dimension to what they should focus in college academics.

For any savvy IT professional these contents are known fact.