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Software Technology

The Implications Of Software Commodity? 149

Posted by simoniker from the the-sun-never-sets dept.
comforteagle writes "David Stutz has written elegant piece over at OSDir.com titled 'Some Implications of Software Commoditization'. It explores the concept of commodification in a historical context while also seeking to discover lessons that might be applied to contemporary open source business efforts. David gets extra points in my books for including sugar, Shakespeare, open source, MP3s, and the British Empire in one article."
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The Implications Of Software Commodity? More

The Implications Of Software Commodity?

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  • of course.... (Score:5, Insightful)

    by Transient0 ( 175617 ) on Monday March 08, 2004 @06:01PM (#8503652) Homepage
    like all property/physical world analogies to information, the differences trump the similarities in every attempt at relevance.

    the fundamental issue being that you can't copy a pound of sugar from one box to another and still ahve the same amount of sugar in the first box.
    • the fundamental issue being that you can't copy a pound of sugar from one box to another and still ahve the same amount of sugar in the first box.

      You can if you clone it.

    • Re:of course.... (Score:2, Insightful)

      by ch-chuck ( 9622 )
      you can't copy a pound of sugar

      and software doesn't just grow on trees either, it has development costs that must be paid for somehow.

      • Re:of course.... (Score:5, Insightful)

        by jfdawes ( 254678 ) on Monday March 08, 2004 @06:27PM (#8503921)
        The problem really is that the act of copying a piece of software is terribly easy and costs: The price of the electricity used to run the devices doing the copying plus the cost of wear and tear on the device plus the cost of the media used to store the new copy plus the cost of wear and tear on the media.

        This is probably on the order of hundredths or thousandths (hundreds and thousands, yay) of a cent. For any piece of software.

        And the old piece of software is still there, unchanged. The act of copying it does not destroy the original.

        Some people may argue that the cost of research and development should be born by the user. They may be correct, who am I to say, however the only version of the software that has those costs directly associated it is the original.

        Getting back to copying a pound of sugar. Just say we had a machine capable of copying the pound of sugar, given some carbon, hydrogen and whatever other raw materials it needed and electricity. Put the original pound of sugar (the one grown/ harvested/ processed/ researched/ transported/ etc) in the machine and "copy" it. Should the user of the copy have to pay for transporting the orginal to the shop where it was sold? Or just for the raw materials and electricity used in the copying process?

        • Re:of course.... (Score:4, Funny)

          by Anonymous Coward on Monday March 08, 2004 @06:37PM (#8504015)
          The problem really is that the act of copying a piece of software is terribly easy and costs: The price of the electricity used to run the devices doing the copying plus the cost of wear and tear on the device plus the cost of the media used to store the new copy plus the cost of wear and tear on the media.

          You forgot that every time you copy software illegally, an angel gets his wings ripped off and baby jesus cries (for 3 hours.)
          • Will someone please change that brat's diapers?
          • It's not as if it's just "easily copyable" things like software/multimedia that's the issue.

            Sure you can't "copy" a bag of sugar, but you can't "copy" a microprocessor either - It's still copyright infringement if you make your own Pentium CPUs.

            Conversely, you can still "steal" a copy of Windows XP off the shelf - you have the physical item (Box, holographic CD etc), wherever you stole it from doesn't.

            The whole concept of IP is to protect ideas, which is a very different paradigm to protecting physical
        • Just say we had a machine capable of copying the pound of sugar

          Then the customer would have to pay for the molecular synthesizer, and I bet they won't be cheap! Ok, say a grocery store buys a $50,000 synthesizer that can make basic raw materials like simple organic substances, sugar, salt, etc. out of water (H & O) and cylinders of carbon dioxide (C & O). He borrows 50 grand from the bank to invest in this technological marvel, and has to pay it back in 15 years, the expected life of the machine.
          • You're right, but you're really just arguing the original point. The technology to copy and store a 1 gigabyte file these days costs about $400 (I'm talking buying the whole computer w/ drives). Maybe less, depending on rebates blah blah.

            In 1948, the same technology would have cost millions. Hell, even the electricity bill would have run into thousands. It may not be possible.

            Let's assume this wonderful copying machine costs on the same order as a PC and reduce the copying costs to raw materials and
          • Nah, synthesizers work based on REAL raw materials, mostly quarks. You can throw anything in there.

            "Hey Joe, the synthesizer is a little low on downs. Throw some electrons in there, will ya?"

        • Re:of course.... (Score:5, Interesting)

          by serutan ( 259622 ) <snoopdoug@@@geekazon...com> on Monday March 08, 2004 @08:33PM (#8504901) Homepage
          I would argue that the cost of research and development should be borne by whoever wants to bear it, whether for profit or not. Giving away something is no crime just because someone else wants to sell it. But it can become a crime if big business controls the government, and it can become immoral if big business controls the media.

          The ultimate goal of programmers is to eliminate the need for programmers, through intelligent software that reprograms itself according to need. I think the ultimate goal of business should be to eliminate the need business. I think we will reach a point, through commodification and automation, where the necessities of life are trivial and at least some of the luxuries are cheap. The only people capable of making that happen are open-source types who create because they want to improve the world.

          The business world in general is going to become like the music industry, keeping prices high through artificial scarcity, enforced essentially at gunpoint by a bought government. An ominous undertone of the free and opensource software controversy is the theme that only businesses should be allowed to threaten other businesses. The idea that providing jobs is more important than eliminating the need to do the work itself may be disguised as morality, but the real motive is to keep a few people in castles no matter where the rest of us have to live.

          • Re:of course.... (Score:3, Insightful)

            by DarkSarin ( 651985 )
            This is correct. There is another point that is important to catch: if we get to the point where we can copy foodstuff as mentioned above, and software copies itself, we will also be able to cheaply replicate pretty much anything (clothing, etc.)

            The question then, is what is left to provide jobs? My answer is this: education and entertainment. If we ever manage to solve the world's problems of food, clothing and other material goods, then the only things that will be of value will be education and eter
          • The ultimate goal of programmers is to eliminate the need for programmers, through intelligent software that reprograms itself according to need
            In my former life, I was a programmer, but I have to admit, my ultimate goal wasn't something worth going into here, but involved a bevy of supermodels rather than self-intelligent software. Perhaps I'm just shortsighted.

        • Re:of course.... (Score:2, Insightful)

          by Gilk180 ( 513755 )
          Some people may argue that the cost of research and development should be born by the user. They may be correct, who am I to say, however the only version of the software that has those costs directly associated it is the original.

          Getting back to copying a pound of sugar. Just say we had a machine capable of copying the pound of sugar, given some carbon, hydrogen and whatever other raw materials it needed and electricity. Put the original pound of sugar (the one grown/ harvested/ processed/ researched/ tra
          • Why shouldn't the costs be amortized? Because it may be impossible to fairly decide what portion of the cost of the copying equipment to assign to each copy. If you want to charge a fee for the use of your copying machine, fine - but do not try to argue that the cost of performing the copy should be in anyway related to the cost of producing the orginal.

            Copyright laws exist for this reason: to protect the investment of the person/people who spent the money to research and develop the product. They are t
            • If you want to charge a fee for the use of your copying machine, fine - but do not try to argue that the cost of performing the copy should be in anyway related to the cost of producing the orginal.

              That isn't the situation intended by the parent. If you are making a copy of something that you produced, then the copying facilities are all you should have to pay for. And you should have to pay whatever the owner can get out of you.

              However, if the only place you enter into the production of the final copy
        • Getting back to copying a pound of sugar. Just say we had a machine capable of copying the pound of sugar, given some carbon, hydrogen and whatever other raw materials it needed and electricity. Put the original pound of sugar (the one grown/ harvested/ processed/ researched/ transported/ etc) in the machine and "copy" it. Should the user of the copy have to pay for transporting the orginal to the shop where it was sold? Or just for the raw materials and electricity used in the copying process?

          How about m

    • Re:of course.... (Score:5, Insightful)

      by ewtrowbr ( 590292 ) on Monday March 08, 2004 @06:28PM (#8503926) Homepage
      You either missed to point, or didn't read the article. A commodity is roughly defined in the article as something for which there is broad demand. The interesting part comes with the networked interchange of the commodity. The analogy holds equally well for sugar and software. "the process of commodification frames the market conversation between consumer and producer"

      • Re:of course.... (Score:5, Interesting)

        by Shurhaian ( 743684 ) <veritas@@@cogeco...ca> on Monday March 08, 2004 @06:43PM (#8504071) Journal
        As this and the next earlier sibling post point out, the commodity here isn't just the software - it's the time and effort that went into developing the software. That cannot be recovered - whereas sugar(consumed, broken down, exhaled as, largely, carbon dioxide and water, both of which are taken up by plants and put back together) works its way back into the ecosystem, and thus, is just as copyable as time and effort, which are ongoing without the steps in the middle.

        Getting off topic here, but the point is, just because software can be copied quickly doesn't make it any less valuable to produce, and that value to the consumers is what defines a commodity.

        • Re:of course.... (Score:3, Interesting)

          by Vancorps ( 746090 )
          I'm sorry, does that mean we should still be paying many thousands of dollars for a TV?

          Inherently when something becomes a commodity you cannot charge as much for it. Imagine if the cost of cars scaled the same way. Granted cars are a very bad example since they have no really changed in price at all. Just arguably more features.

          Still, how do people make money producing a commodity? There are many ways, refer to sugar industry execs for lessons, same with coffee, and for that matter all the crops. You ma

        • Re:of course.... (Score:5, Interesting)

          by LouieLing ( 690487 ) on Monday March 08, 2004 @10:09PM (#8505834)
          You are all so dazzled by the commodity form that you cannot "think out of the box" & see that the process of commodification is endemic to capitalism
          as is the notion of scarcity, well as the fiction
          of the "Law of Supply & Demand". This is no where
          better exposed than in the writings of Thorsten Veblen, a unique & much neglected U.S. economist & social critic. This little excerpt for your gestation is from his "The Engineers and the Price
          System" (1921):

          The mechanical industry of the new order is inordinately productive. So the
          rate and volume of output have to be regulated with a view to what the
          traffic will bear -- that is to say, what will yield the largest net return in
          terms of price to the business men who manage the country's industrial
          system. Otherwise there will be "overproduction," business depression, and
          consequent hard times all around. Overproduction means production in
          excess of what the market will carry off at a sufficiently profitable price. So
          it appears that the continued prosperity of the country from day to day hangs
          on a "conscientious withdrawal of efficiency" by the business men who
          control the country's industrial output. They control it all for their own use,
          of course, and their own use means always a profitable price. In any
          community that is organized on the price system, with investment and
          business enterprise, habitual unemployment of the available industrial plant
          and workmen, in whole or in part, appears to be the indispensable condition
          without which tolerable conditions of life cannot be maintained. That is to
          say, in no such community can the industrial system be allowed to work at
          full capacity for any appreciable interval of time, on pain of business
          stagnation and consequent privation for all classes and conditions of men.
          The requirements of profitable business will not tolerate it. So the rate and
          volume of output must be adjusted to the needs of the market, not to the
          working capacity of the available resources, equipment and man power, nor
          to the community's need of consumable goods. Therefore there must always
          be a certain variable margin of unemployment of plant and man power. Rate
          and volume of output can, of course, not be adjusted by exceeding the
          productive capacity of the industrial system. So it has to be regulated by
          keeping short of maximum production by more or less as the condition of the
          market may require. It is always a question of more or less unemployment
          of plant and man power, and a shrewd moderation in the unemployment of
          these available resources, a "conscientious withdrawal of efficiency,"
          therefore, is the beginning of wisdom in all sound workday business
          enterprise that has to do with industry.

          To read the rest of this essay see:

          http://socserv2.mcmaster.ca/~econ/ugcm/3ll3/vebl en /

          His analysis of the relationship between "big business" and the application of science & technology is first rate even if his suggested resolution seems more fanciful today than when he
          first proposed it.
          • The counterargument to this is quite simple. If we improve efficiency in one area (overproduce) another may go underproduced because resources are lacking. If the car industry was to go full tilt someone wanting to develop a new steel product may not be able to get the steel to produce their contraption.

            The Soviet Union was a good example of this. They could produce great quantities of items. However they still still suffered crippling shortages. A good example is the soviet manufacturing of TVs. The

    • Re:of course.... (Score:3, Insightful)

      by Brandybuck ( 704397 )
      The other major difference is the genericity of commodities. Bottled water is bottled water is bottled water, in much the same way that white sugar is white sugar is white sugar. Or as Bob Young would say, catsup is ketchup is catsup.

      Unless you're a brand fanatic, replacing this diner's premium coffe with New Folgers Crystals isn't going to make any difference to anyone. But go recreate that classic television commercial by replacing someone's Mac OSX with a Dell running Linux and you'll hear quite a lot o
      • You're on the right track here. A commodity is usually defined as physical substance, such as food, grains, and metals, frozen orange juice, etc. which is interchangeable with another product of the same type. Equating Folgers with ground coffee is pushing it, but technically you are correct. The restaurant or diner is selling a hot brown liquid.

        Commodity also implies both mass supply and mass demand, although these are rarely in equilibrium.

        Calling software a commodity implies that it is interchangable.
      • The other major difference is the genericity of commodities. Bottled water is bottled water is bottled water, in much the same way that white sugar is white sugar is white sugar. Or as Bob Young would say, catsup is ketchup is catsup.

        Unless you're a brand fanatic, replacing this diner's premium coffe with New Folgers Crystals isn't going to make any difference to anyone. But go recreate that classic television commercial by replacing someone's Mac OSX with a Dell running Linux and you'll hear quite a lot

    • Re:of course.... (Score:5, Interesting)

      by ciaran_o_riordan ( 662132 ) on Monday March 08, 2004 @06:49PM (#8504127) Homepage
      If a food copier existed - if you could create as much food as you wanted, for the same cost as producing one portion of food - there would be riots in any country that prohibited the copying of food. (and rightly so.)

      Commerce, like creativity, is brownian motion. Don't hold back society because you're afraid the stock prices of last centuries monopolies will drop.

      Copyright is simply artificial scarcity for software. We have enough scarcity in the world.
      • If a food copier existed - if you could create as much food as you wanted, for the same cost as producing one portion of food - there would be riots in any country that prohibited the copying of food. (and rightly so.)

        Actually food copier does exist. Want more apples? Take the seeds plant them and wait a while (the copy process is slow :)).

        Unfortunately the cost is still pretty much the same.

        But I have heard of farmers being sued for planting genetically modified seeds (which were patented), even b

      • Re:of course.... (Score:3, Insightful)

        by Artifakt ( 700173 )
        If we make scarcity scarcer, then someday there won't be enough to go around, and only the wealthy will be able to afford scarcity anymore. At this point, War and Pestilence are having a tough time generating scarcity without motivating some people to reduce scarcity at the same time, and even Famine and Death seem to be on the brink of faltering in what was once an unbroken string of successes. Is this the future you want for your children? (Because it's certainly what I want for mine).
      • The problem with food is that the final product have a cost similar to the one of their components. Take aids medicine, for instance, it is possible to copy those for a price witch could be considered free by most, but they are not.

        In the same way when you copy a file this copy is not free, it cost space in some medium and also to make this copy you use energy. Sure this price is so low that could be considered free by even poor people.
  • Everyone knows that Shakespeare (who was a sugar freak) would have released his work as Open Source in an MP3 format if the British Empire hadn't stopped him.

  • Try this instead (Score:5, Informative)

    by jfdawes ( 254678 ) on Monday March 08, 2004 @06:09PM (#8503726)
    From David Stutz's website [synthesist.net] (http://www.synthesist.net/writing/commodity_softw are.html)

  • One SENTENCE! (Score:5, Funny)

    by Milo Fungus ( 232863 ) on Monday March 08, 2004 @06:09PM (#8503727)
    simoniker really just wanted to one-up David Stutz by including sugar, Shakespeare, open source, MP3s, and the British Empire in one SENTENCE! Is there a special karma bonus for that?

    (Hey! I just did it too! Can I have the karma bonus as well? Nevermind the karma. Just visit my website and support the Creative Commons.)
  • This article was originally posted on Stutz' website. Since OSDir seems to be slashdotted, you can read it here [synthesist.net]!

  • Lessons in history (Score:5, Insightful)

    by Un0r1g1nal ( 711750 ) on Monday March 08, 2004 @06:12PM (#8503755)
    While there are many lessons to be learnt from history, the human race in general seems not to care, actually let me rephrase that .. .. the people with all the money and the governments supposedly representing the masses but actually more likely on the pay check of said rich people/companies do not care in the slightest. They would prefer to opress progressive science by stopping technological advancement by whatever means necessary, because it would put a dent in their profits!!

  • /.'ed Text (Score:5, Informative)

    by comforteagle ( 728960 ) on Monday March 08, 2004 @06:13PM (#8503766) Homepage Journal
    I often used the phrase "the commodification of software" to represent what I believe is the critical force behind the rise of open source software. Broadly used software is now defined primarily by its capacity for networked data exchange of standardized commodity datatypes such as a web page, an MP3 file, a UNIX executable, or a Word document, rather than its application model and user interface. This short note explores the concept of commodification in a historical context while also seeking to discover lessons that might be applied to contemporary open source business efforts.

    Commodity

    The word commodity is used today to represent fodder for industrial processes: things or substances that are found to be valuable as basic building blocks for many different purposes. Because of their very general value, they are typically used in large quantities and in many different ways. Commodities are always sourced by more than one producer, and consumers may substitute one producer's product for another's with impunity. Because commodities are fungible in this way, they are defined by uniform quality standards to which they must conform. These quality standards help to avoid adulteration, and also facilitate quick and easy valuation, which in turn fosters productivity gains.

    Karl Marx considers commodities important enough to begin his book Capital with a discussion of them. The first chapter concludes with a discussion of what he terms "the fetishism of commodities," from which the following quote is taken:
    A commodity appears, at first sight, a very trivial thing, and easily understood. Its analysis shows that it is, in reality, a very queer thing, abounding in metaphysical subtleties and theological niceties. So far as it is a value in use, there is nothing mysterious about it whether we consider it from the point of view that by its properties it is capable of satisfying human wants, or from the point that those properties are the product of human labor. It is as clear as noon-day, that man, by his industry, changes the forms of the materials furnished by nature, in such a way as to make them useful to him.

    Marx asserts that commodity markets are more about power, politics, and even religion, than they are about their actual underlying resources. Commodities exist to facilitate exchange (and, since this is Marx, to subjugate the laborer). They are a way to build up an abstract world in the image of commerce, rather than reflect a more natural order for the world. Commodities are a reflection of the politics of human values: the contracts by which commodities are defined, and the standards that form the foundation for such contracts, are more important than the inherent quality of the commoditized thing. This is a very important lesson to learn, and one which the open source community should heed when marshaling its limited resources.
    Commodity, the bias of the world

    Shakespeare, of course, always has something to say.

    Here is a soliloquy that concludes Act II of King John on the topic of Commodity. It is delivered in the play by the bastard son of Richard Coeur de Lyon, who has just convinced England and France, at war with each other, to suddenly strike an opportunistic political bargain and ally themselves against the city of Angiers:

    Mad world! mad kings! mad composition!
    John, to stop Arthur's title in the whole,
    Hath willingly departed with a part,
    And France, whose armour conscience buckled on,
    Whom zeal and charity brought to the field
    As God's own soldier, rounded in the ear
    With that same purpose-changer, that sly devil,
    That broker, that still breaks the pate of faith,
    That daily break-vow, he that wins of all,
    Of kings, of beggars, old men, young men, maids,
    Who, having no external thing to lose
    But the word 'maid,' cheats the poor maid of that,
    That smooth-faced gentleman, tickling Commodity,
    Commodity, the bias of the world,
    The world, who of itself is peised well,
    Made to run even upon even ground,
    T

  • Oh yeah? new form of karma whoring (Score:5, Funny)

    by Rosco P. Coltrane ( 209368 ) on Monday March 08, 2004 @06:18PM (#8503812)
    David gets extra points in my books for including sugar, Shakespeare, open source, MP3s, and the British Empire in one article.

    "To MP3 or not to MP3, that is the question:
    Whether 'tis GNUer in the mind to suffer
    The slings and arrows of outrageous coffee with no sugar
    ..."

    Okay, do I get points now?

  • Commodities: Low Cost vs. Standards (Score:5, Interesting)

    by G4from128k ( 686170 ) on Monday March 08, 2004 @06:20PM (#8503844)
    Commodities have two key business properties. First, competition is based on price -- the efficient low-cost producer gets the business. Second, commodities are standardized so that the same commodity from two different sources can be interchangable.

    With regard to price competition, OSS seems to have a big advantage. Free beats proprietary on price any day. The only interesting question is whether OSS software makers are more cost-efficient ($/line-of-code) at developing new software than are close-source vendors. Perhaps this will come down to a competition between developing -world OSS developers who work parttime for free for OSS versus developing-world developers who get paid a fraction of the labor rate, but work full-time for commerical software vendors.

    With regard to standards, I fear that Microsoft has made itself the de facto standard inspite of all the open standards bodies. Even the web seems to be moving into the MS camp. Websites are developed to display well in Internet Explorer, streaming media is often only available in Media Player, everyone uses MS Office, and soon many might be forced to use MS trusted computing. I'm not sure how open standards can re-assert themselves to commodify the playing field in terms of non-MS-controlled "standards."

    Software won't be a commodity as long as one player controls the standards because one player has monopoly marketshare and everyone neds to be compatiable with that standard.

    • Commodity the way gasoline is a commodity (Score:5, Insightful)

      by Latent Heat ( 558884 ) on Monday March 08, 2004 @06:47PM (#8504098)
      Software is a commodity in the way a gallon of gas is a commodity -- if to run my car I had to pump in exactly 10 gallons of gas, and then I had to add exactly 10 ounces of a detergent additive, and there were several incompatible brands of detergent additive on the market, and everytime I wanted to fill the tank I had to read labels and figure out if I had the right kind.

      I am thinking that OSS is a commodity in the sense that computer hardware was a commodity in the pre-PC days of CP-M and the S-100 bus. Jerry Pournelle had this mantra "iron is expensive, silicon is cheap" that a person would "invest" in a boat anchor cabinet, a good power supply, and an S-100 backplane and then plug in boards with memory, processors, and peripherals and upgrade the silicon while keeping the boat anchor iron.

      This putting a computer together from parts required someone who knew what they were doing, and Pournelle plugged the idea of "system integrators", dudes who would in essence sell you generic hardware, but in their markup they were selling you a service of knowing what hardware was compatible with what and where to get the drivers for everything.

      For all the talk of Linux weenies and lusers, the average Linux distro really is not an end user product, but it seems that the Linux savy could pull together pieces parts of software and put together systems tailored to the requirements of specific customers. You know, open and free software, but the money is to be made in providing services, and the service is being the propeller head who knows what software is out there and what works with what, and what configuration tweaks will make a customer happy.

      The PC kind of changed Pournelle's model. The silicon was cheap, but the iron (cabinet, motherboard, power supply) started coming from Free China and later from Not-Quite-As-Free China and it became cheap, and with the business model of Dell, it is pretty much cheaper just to replace the whole system than poke around with doing your own upgrades.

      As far as the software, the software has kind of moved away from this mix and match model as well. Sure, a Windows install may be as hard as some Linux distro installs, but who even installs software -- you buy the computer with Windows, Office, and networking already installed from Dell. So I guess the system integration has become a mass market instead of a cottage industry.

      I am thinking that for Linux to catch on, there has to be some patron, some "angel", some big player to do the system integration and sell ready-to-run systems to the mass market. Is it Wal-Mart and Lindows? Is it SUN and their "Java workstation?"

    • Software won't be a commodity as long as one player controls the standards

      Or as long as there aren't any true standards. I usually compare software to marriage: before getting any software you must get to know rather well what you are thinking about, and be really sure about your intentions. Shifting from one software to another is often as traumatic as getting a divorce. My company a few years back changed from an in-house accounting software to SAP. It took from six months to a year before they got it r

    • i am confused. i consider format standardization as being different than software commoditization. software is not sugar, and is infinitly (well almost) differentiable. people said the browser had been commoditized, but if that were true then i wouldn't care if i had to use ie, but i do care (i gotta have tabs).

      now i think we're a little biased here on slashdot because we want operating systems to be a commodity. but even if linux and windows shared the same executable format (100% compatible), they still
      • i believe standardization is a good thing.
        Uh, you do know that it is "standard" (at least in English) to capitalize the word "I" and the first word in a sentence, don't you?
        If you think that standardization is such a good thing, then why don't you follow elementary standards of written English?
    • It's not about price. Building software is about composing commodities into something that is not yet a commodity. With microsoft you have to pay for the commodities. With OSS you get the commodities for free and, depending on the license, your creation becomes a commodity for others to use.

      The problem for MS is that because of their position on OSS, they are denying themselves access to a huge repository of commodities. While occasionally some OSS commodity slips in (like the BSD TCP stack), most of the d

  • The implications of software commodity... (Score:1, Interesting)

    by Anonymous Coward
    ...have nothing on the even greater implications of hardware commodity and its impact on web server scaling.

  • software == bullets, snipers not a commodity (Score:5, Insightful)

    by puzzled ( 12525 ) on Monday March 08, 2004 @06:26PM (#8503907) Journal
    The fact that software is approaching $0 in cost doesn't mean there are less jobs for software people, it just means that a great deal of what was purely IT 'territory' is now going to be dual role, with software developers having to know a portion of the business as well.

    The large employers with their vertical silos inside the organization will fight (and loose) this change, while smaller employers everywhere are already reaping the benefits. Stop billing yourself as a 'software' guy and go get some background in operations accounting, marketing, logistics, whatever, but the days of the separate priesthood are numbered - your choices are a.) on top of the wave b.) not very palatable fish food.

    I'm a sniper and while the target rich environment of the pre bubble economy is gone there are plenty of profitable things left to 'shoot'.

    • Re:software == bullets, snipers not a commodity (Score:1, Insightful)

      by Anonymous Coward
      Stop billing yourself as a 'software' guy and go get some background in operations accounting, marketing, logistics, whatever

      I find it surprising how anyone could anyone think to call themselves a 'software' guy without these backgrounds? What exactly does this 'software' of yours do? I find that writing accounting, marketing, and logistics software requires me to become proficient in these backgrounds and many more. If your understanding of the software begins and ends with the source code control system

  • After reading the article (Score:2, Funny)

    by Anonymous Coward
    If I see the word "commodity" one more time today, I am going to puke.

  • Strongly disagree (Score:5, Interesting)

    by Sean80 ( 567340 ) on Monday March 08, 2004 @06:32PM (#8503963)
    I can't get to the article - it appears to already be /.'ed. However, I must say I strongly disagree with the assumption that software is a commodity. I think what Open Source has done is place into question the approach which the software industry takes. In my view, this does not in and of itself make software a commodity.

    As others have already noted - and which was noted in "IT doesn't matter" - is that the issue with packaged software is that everybody can buy it for a reasonably small price. In so much, it by definition becomes a commodity. However, packaged software covers only a small portion of the market for software. In-house solutions and so forth could not be considered a commodity if they provide a sustainable competitive advantage for some particular company. Imagine a software toolkit which allowed a company to estimate, with 99% accuracy, the future movements of markets in which they compete. It would be laughable to consider such a piece of software a commodity.

    So what's the point of all this. I think what Open Source has done is pressure the big software houses to become more innovative than ever before. It's not good enough to come up with a good idea (a la MS Office or MS Windows) and tack feature after useless feature onto it just to get people to upgrade. Companies then need only buy software upgradesto "keep up with the Jones." However, there isn't any competitive advantage in this, and the economics of IT has borne that statement out - nobody has ever really revolutionized their companies using IT. What the software houses need to do is envisage IT products in terms of months of useful life, and not years, or even decades. The key issue here will become: "how long can this piece of software give me a competitive advantage before everybody has it?" Exclusive contracts with software houses will become the norm, before software is released "to the masses." Software products will be canibalized within months by the same company that originally produced it. Sales cycles will decrease to days, rather than months or years as it stands now.

    Finally, for-profit companies will need to mobilize to head off the threat of Open-Source. Intrinsic motivation is a hard battle to fight, and software companies will need to fundamentally change the way they approach HR issues and corporate reporting hierarchies if they want to compete with a legion of programmers who write code because they want to and they enjoy it. Monetary compensation schemes simply can't bring that level of devotion to a task.

    Yes, the software industry as we know it, and the software it produces, will become a "commodity." Companies that understand how to avoid this will just blow away their competitors by bringing fundamentally brilliant software products to market. And you know what? The customer, as always, will win, over and over again.

    Bravo to Open Source for forcing this upon the industry.

    • Re:Strongly disagree (Score:3, Interesting)

      by jfdawes ( 254678 )
      One of the points the article makes is that a resource becomes a commodity when demand becomes high enough. There was also some implication that the high demands causes standardization. Essentially he's saying that MP3 players are already commodities, whereas custom built software for specific, individual projects are not.
      Saying "software is a commodity" doesn't make sense, the word "software" covers too many things - sort of like saying "gas is a commodity". The gas you by from 76 is a commodity, the ga

    • While I agree with most of this posting, I would go further.

      Software production, in my experience, is NOT a freely-interchangable commodity., because programmers are not of equal ability.

      In other words, software quality is not so much a function of the process used to produce it, as it is a function of the insight of who produced it. I see "software engineering" (and approach it) more as art than as a production problem. For example, while some art is displayed in museums, to be viewed over and over a

      • 50 million* third world programmers say you're wrong.

        The economics of art are exactly the opposite of what we are dealing with. Fine art is based on unique objects (at best, limited editions). Outside of the fine art world, you're again dealing with mass produced products.

        The exception is performance art. Are you suggesting that one can make a living as a programming performance artist?

        *I just pulled this figure out of my ass.

    • What the software houses need to do is envisage IT products in terms of months of useful life, and not years, or even decades. The key issue here will become: "how long can this piece of software give me a competitive advantage before everybody has it?" Exclusive contracts with software houses will become the norm, before software is released "to the masses." Software products will be canibalized within months by the same company that originally produced it. Sales cycles will decrease to days, rather than m

  • google cache of original text (Score:3, Informative)

    by AmVidia HQ ( 572086 ) <[gfung] [at] [me.com]> on Monday March 08, 2004 @06:35PM (#8503995) Homepage
    here [216.239.53.104], which OSDir likely copied from.

  • Lots of words ... summary (Score:5, Informative)

    by rjstanford ( 69735 ) on Monday March 08, 2004 @06:36PM (#8504008) Homepage Journal
    Well, after reading all the way through the article:
    1. Commodities are things that can be exchanged for one another. They are able to be sourced by and consumed by multiple entities.
    2. UNIX programs are commodities in a way due to the standardization of the core POSIX APIs.
    3. Document formats, such as the Microsoft .DOC format, are going to change to allow documents to be used more as commodities.
    4. This is both good and inevitable.
    It really didn't say a whole lot else. I mean, it was an interesting introduction, but I found myself looking for a page 2 on which the point would be made. Hrmph.

  • Commodification of Data, more like... (Score:3, Insightful)

    by valence ( 164639 ) * on Monday March 08, 2004 @06:38PM (#8504028)
    This article is interesting, but rather than the commodification of software, it's more the commodification of data that's really being discussed. His examples and ideas really concern data format standardization and that standards are what allow data to become commodities.

    In that sense, I agree completely... demand for "market" in distributable music spurs the popularization of a standard and an infrastructure for distribution (e.g. peer-to-peer networks). And I definitely agree that software should be written to take advantage of economies provided by using standardized data.

    Of course, it's kind of obvious that demand precedes standardization, since standardization takes effort and some kind of demand must exist (even if it's just a, "Hey, wouldn't it been keen if...") before people will get off their duffs to figure out, formalize, and make available a standard.
    • Of course, it's kind of obvious that demand precedes standardization, since standardization takes effort and some kind of demand must exist (even if it's just a, "Hey, wouldn't it been keen if...") before people will get off their duffs to figure out, formalize, and make available a standard.

      I disagree with you there. I think standardization is an emegent process, not a design process. Did Apache become the ubiquitous web server by creating a standard? Maybe the better question is did the HTML / HTTP desi
    • Damn, I missed the Preview button and hit Submit. Sorry.

      This article is interesting, but rather than the commodification of software, it's more the commodification of data that's really being discussed. His examples and ideas really concern data format standardization and that standards are what allow data to become commodities.

      He does mention data formats, but he talks about APIs, too, and makes a decent point that the UNIX API will be the commodity API.

      And maybe I just read this into his article bec

  • What historical context? (Score:4, Insightful)

    by 192939495969798999 ( 58312 ) <info AT devinmoore DOT com> on Monday March 08, 2004 @06:39PM (#8504042) Homepage Journal
    How long has Shakespeare been around? 400 years or so? How about sugar? Well over 1000 years, right? My dad was in the room when the "first" computer program (calculating PI to 1000 places on the ENIAC) was run, and he's still using computers today. Any commoditization of computer software in the last, say 10 years, is surely coming on too fast to be compared with "historical context" that spans tens or hundreds of generations of humans. I would say that MAYBE 50-100 years from now, people could look back at today and make a statement like that, assuming that OSS doesn't go away in 10-15-20-30-40 years. There is just too much change right now to say anything concrete about where software is "going" (although I concede it's interesting to think about).
    • Any commoditization of computer software in the last, say 10 years, is surely coming on too fast to be compared with "historical context" that spans tens or hundreds of generations of humans.

      But look at how much things have changed in the past three or four generations. The industrial age has increased production of food and materials for much of the world. Travel became much easier and common among all classes of people. ...

      Whoops, I meant to back up a bit further and mention Gutenberg's press first. It
    • Sugar may have been around for thousands of years (as a harvested resource, millions as a chemical) but its only been a commodity for a few hundred; when the availability of sugar cane, international trading, the slave trade, the fashionability of New World goods (coffee, tobacco, chocolate and cane sugar) the emergence of a large middle class who could afford to buy foods they didn't really need, the military and entrepreneurial adventures of the European Empires, all combined to make sugar a product that

  • You keep saying that word, but I do not think it means what you think it means...

    Yes, usually a commodity is something cheap that has lots of competition- but that isn't the point. A commodity is 'something that is used to make other stuff(tm)'.
    The point is that the good sold is used as an input to make other goods.

    That used to be a 'big deal' when people with invisible hands were groping[for 42]... Now, ehh...

    Oh, and I say Windows is not a commodity because it's not a good :)[neg. marginal utility=a '

    • I think you were closer with the first part of your answer i.e. usually a commodity is cheap and has lots of competition. It is not necessarily something that is used to make other stuff - that is a raw material or an intermediate product. A commodity is an undifferentiated product for which the output of any one producer can not be meaningfully distinguished from that of any other producer. The point is, therefore, that the producer has little or no pricing power in the absence of a producers' cartel or
      • No- in fact you are diametrically off.

        Individual goods can be vastly demand-elastic compared with the composite market for that good, and NOT be a commodity.

        The point is, therefore, that the producer has little or no pricing power in the absence of a producers' cartel or other market distorting mechanism.

        The point that denotes a commodity is not the overall elasticity of the market. That's my point.

        In a desire to be balanced- The reality of how the term is used connotes lack of differentiation and

      • Look, to help nip this in the bud:

        a The word commodity is used today to represent fodder for industrial processes: things or substances that are found to be valuable as basic building blocks for many different purposes. b Because of their very general value, they are typically used in large quantities and in many different ways. Commodities are always sourced by more than one producer, and consumers may substitute one producer's product for another's with impunity. Because commodities are fungible in this

        • Agreed, that (a) the author's conclusions about productivity gains is a complete non sequitur and (b) this should be nipped in the bud, so I will lay aside my own essay in micro-economics, which as you might guess, would have focused a great deal on the elasticity of demand. In the end we would both be right because there are a number of different definitions of *commodity* depending on where you are in economics, and I suspect that we are both too busy for this and would be modded to the floor.

  • absurd (Score:1)

    by drwho ( 4190 )
    The whole idea of software being a commodity is absurd. Intellectual property can't be a commodity. By defenition, intellectual property has no physical form, which is why there are so many laws protecting IP owners from those who would copy it ad-infinitum. A commodity is a thing that is physical, and one unit of it is interchangeable with another. There's probably better ways of expressing this, but maybe that will be my doctoral thesis or something.

  • uniformity, the unix api, the user (Score:3, Informative)

    by scotty777 ( 681923 ) on Monday March 08, 2004 @10:40PM (#8506152) Journal
    exactly right: the unix api will dominate OS api's because it is uniform and is "good enough" for people to build on. Notice that he excludes graphic programs.

    When we in the open source / free community develop and adopt a simple "good enough" user interface standard the same will happen in graphic programs.

    I suggest that "eye candy" interfaces push mass desktop users away from our OS of choice. Push them back to MS word, excel, etc. A very simple and uniform user experience is needed.

    in addition, I suggest: a interface standard will lead to more programming work, since a wider array of programs would be understandable to "average joe" users.

    Therefor, I suggest that every desktop have two modes, the "hyper vanilla", and the personalized. At the click of, say, alt F1, the mode would toggle.

    this would dramaticly ease tech support assistance and tutorial creation.

    cheers

  • Reading the comments (Score:3, Interesting)

    by zangdesign ( 462534 ) on Monday March 08, 2004 @11:33PM (#8506608) Journal
    The funny thing is, as I read the comments here, everyone speaks of software as if it's a physical thing. Sure, it has a physical reference, but there's nothing you can point to and say, that's software, like you can with sugar or wheat. You can't buy a "pound of software", strictly speaking.

    What can be commoditized is time; specifically, the time spent to create software. It can be rationalized, measured, spent, etc., and there is already an existing metaphor for compensating one for these various actions: the hourly rate. Software production costs time and money (or no money, as we'll see).

    Read the whole discussion before you blow up.

    In a sense, Free Software takes the whole paradigm of time having value and does away with it entirely. With Free Software, one cannot expect to receive money for the time spent. One creates software and turns it loose on the whole world, or some small portion of it and receives recognition (or not) from the receiving audience. Strictly speaking, if you receive money for developing something, it cannot be considered Free Software - somebody paid something for it.

    In a sense, it is a slap in the face to software companies and to those of us who work for money. Free Software says that the time and money spent hiring a programmer and designers (or me) to produce a given piece of software was wasted: what y'all spent millions over the course of six months to develop, we can do for free in eight months or a year.

    On the other hand, there is an argument to be made in favor of the greater public good. Software is expensive, and specialized software is even more so, perhaps out of the reach of some developing businesses. Certain types of software are important enough that perhaps they should be free, but determining which is an impossible task. An operating system - that's pretty easy; an MP3 player - not so easy. How does an MP3 player benefit the overall public?

    To my mindset, money helps smooth over one of the basic problems of humans: ego. If we lived in a world where everything was produced freely and given freely, that would be great. But how do you compensate for that jerk down the road who sits on his ass all day and just takes and takes rather than giving back to society in some form? The answer is you force him to pay for the materials he uses and consumes. That requires money. Sure, he could work it off, but we've already established that he's a lazy bastard and won't work.

    Thus, I have to come down in favor of paying for software. I don't think it can be properly commoditized in the same sense that sugar can. In fact, I'm not even sure there's a proper word for that type of a thing. What I do know is that certain forms of Free Software are a kind of slap in the face - saying that the time I spent and the education I paid for are worthless.

    These are only my views. Pillory away.

    • Re:Reading the comments (Score:5, Interesting)

      by PCM2 ( 4486 ) on Tuesday March 09, 2004 @12:24AM (#8506954) Homepage
      You can't buy a "pound of software", strictly speaking. What can be commoditized is time; specifically, the time spent to create software.
      I think you're missing the point. A commodity market [wikipedia.org] is one in which there may be multiple suppliers, but the product obtained from each is (in the eyes of the purchaser) undifferentiated. Not all software can be seen this way, but certain software categories can be.
      • I might say, "I am going to buy a J2EE application server." Hearing that, you need not assume I mean BEA Weblogic. There are a number of alternatives, and which one I pick doesn't really matter (at this level of decision-making, anyway).
      • I might say "I am going to buy a relational database." There is no reason to assume I mean IBM DB2 -- but I might mean that. Whatever.
      • I might say, "I am going to buy a disk defragmenter." There's no particular reason why that needs to be Norton Utilities. Etc.
      If you have a bunch of products, and they're all perceived as being roughly identical and undifferentiated, then you have a commodity market. All that has to happen is for a free alternative to come along -- similarly undifferentiated, but equal in perceived value -- and the bottom drops out.

      Most software isn't quite at that level yet, though. Superficially it may be, but as I drill down in the decision-making process it becomes more complicated. J2EE application servers differentiate themselves not by the base server container, but by the add-ons the vendor supplies to do business processing. Databases do various sophisticated things, such as clustering and replication, and each one does it in a different way, enough so that you could defend a decision favoring one over the other.

      Web server software isn't a commodity market, either. Apache isn't successful just because it's free. It doesn't have a lot of competition because it would take a lot of work to produce a product of comparable value, and Apache would still be free. Those that do try to compete, again, have to differentiate themselves -- e.g. Zeus is all about speed.

      This article seems to be arguing that the ways in which Microsoft seems to be trying to differentiate its products -- e.g. through the Word file format -- are based on activities so mundane (legible documents) that their markets cannot possibly be defended against commoditization. Maybe that's true, I dunno. To sound the old "impending paradigm shift" trumpet seems a little melodramatic to me, though.

      • Frankly, by the time you have a "commodity" like component for software it's pretty much obsolete. How long have "relational databases" been around? 5 years or so? And how long will they still be around? We have hundreds of thousands of CompSci grads working on the "next big thing." Defragmenting tools were eliminated by improving the file system itself (ala ReiserFS) or simply by increasing the size of the disk to the point that files never have to be split.

        The real commodities are standards. SQL is popu

        • How long have "relational databases" been around? 5 years or so?

          Errr, try about 34 years, give or take. [web.cern.ch]

          The real commodities are standards. SQL is popular because there is an ANSI standard behind it. SELECT has a structure that all database backends understand. I can develop and INSERT statement that works with everything from sqlite to Oracle/PL.

          Whoah! I see what you're getting at, but you picked one lousy example. Yeah, every database supports SELECT and INSERT, but that's about where SQL interopera

    • One creates software and turns it loose on the whole world, or some small portion of it and receives recognition (or not) from the receiving audience.

      Replace the word software with journal submissions or peer-reviewed articles for a similar, time-tested approach in academia.

  • And points for using Braudel's The Structures of Everyday Life (my review [dannyreviews.com]).

    Danny.

  • software is made as a good.. by a company.. same as shoes, or socks.. time was put into the design, not including production costs.. this is a far greater percentage of cost for goods with software...

    Saying you should be able to copy any software, is as obsurd as saying you should be able to copy currency... if it is legal to copy the goods you didn't create, how about copying money you at least earned?
  • Coincidentally, I've just been reading the original Halloween Document [opensource.org] so when I saw the author's name, it rang a bell. He was talking about "commoditization" [opensource.org](in the context of protocols) back then, too.

    BTW, for anyone who's never read the original Halloween doc, it's well worth a read. There's some amusing stuff in there about things being "stolen" from Unix and put into Linux, and how SCO are likely to be wiped out by Linux before long (and this back in 1998!).
    • It's like Newton. "Hey, Liebnitz couldn't have invented calculis. I'm the only genius in the world." Newton went so far as to have his royal society convict Liebnitz of plagurism.

      Little factoid, to this day we use Liebnitz's notation. Newton's stunk for everything but physics problems, and his notion of an integral was REALLY crude. Of course the spat drove Liebnitz out of his mind, and turned Newton into a recluse.

      And talk about a geek. Newton never got laid, and worse, he was PROUD about of it.

      Mora

  • The article makes a strange omission in not talking about computer hardware as a commodity. The commodification of hardware that happened with the emergence of PC clones had a tremendous impact on many software companies, especially Microsoft with DOS and later Windows. The important thing in this case is that we have a combination of the commodificaiton on one product (once IBM no longer had a monopoly you could replace any piece of hardware with hardware from a rival company, hence price and rapid cheap t
  • Software may be free some day. But I'm willing to bet that there will still be a critical need for people who know how to use software to get a job done.

    Not every problem will be solved by the open source community because most problems that exist in the real world are not solved by basic applications. Basic applications support the solving of big problems. But Complex applications solve specific problems.

    I also would be willing to bet that problems will always outnumber solutions.
  • Stutz say "the presence of multiple producers stokes the furnace of competition (although perhaps only after protectionist governments and corporations are shouted down by consumers and crafty businesspeople)" However, in part of the research world that I work in, involving 3D geo-realistic and geo-specific databases for real-time simulation and training, it is the "crafty businesspeople" who have resisted commodification, pushing their own proprietary standards, hoping to make THEIR standard THE de-facto

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