For those who believe software is a quick road to riches, think again. As RedMonk analyst Stephen O'Grady detailed in his Open Source Business Conference keynote, the top 20 software companies are relatively low on Fortune 500's totem pole of revenue, and not a single one lands in the top 10. And of the top 20 companies on PwC' …
If you think data is valuable, give me an e-mail address and I'll send you a core dump.
Where'd you get it???
by fingering the BOFH account?
In other news, the pope is said to hold catholic beliefs and ursine creatures defecate in arboreal areas.,
Knowlege is power - and you can substitute data for knowledge in this age..
What remains to be seen is if the greater public can realise that their data is valuable, and can actualise its value before the corporations wrest control - and whether rear guard actions by Viviane Redding (having heard her speak, I've gained a lot of respect for her) and other legislators can protect us from the corporations
Unless you're in the games business
Or selling legacy systems, software is generally a cost centre and not a profit centre. Most of the software in the world isn't made by software companies, and it it's an overhead of doing business that makes money then why not share it and the cost of it.
Laughing all the way to the bank.
You can't make money in SaaS?
You have to be kidding!
Okay, RedHat isn't worth much, not because they sell software, but because they fail to sell software - they sell support, which if they do a good job writing the software, no one will need! Its a crap business plan.
Google and Facebook do sell data, but have no sticking power. As Zuckerburg becomes more keep to sell, FB will get more ads, and go the way of MySpace.
Apple? What data to they have? (other than everyone's location =). They make money selling hardware - expensive hardware, which unlike software, people will pay for because you can't just copy it. That is why they have similiar market cap to Dell and IBM - because OF PHYSICAL HARDWARE, not ghostly web 2.0 data mumbo jumbo.
That presentation is embarrassing
It reads like someone has taken two tablespoons of blue chip brands, a teaspoon of corporate buzz words and a pinch of aspiration ('just do what Google did and you can be like them') and stuck them in a blender to come out with a jumble of conclusions that have no value to startups trying to find their way to relevance or profitability.
Why is it a surprise to the presenter that when large established software companies routinely buy the cream of the smaller and more dynamic software companies this serves to consolidate their position in the market?
Further, given that Facebook and Google's sky high market caps are a product of the hopes of their investors that they'll build monopoly positions in the nascent data markets what value is it to startups to try to copy them? If he's unaware that dozens of Facetubes and Youbooks are failing by the day because Facebook and Youtube already exist then he needs taking out and putting down.
Finally, and most critically, the very fact that the smaller and more dynamic software companies get acquired and make their founders rich shows that there is continuing value in being genuinely innovative in this market. If anyone gets to that stage and wants to try to challenge the behemoths rather than sell out to them then I wish them the best, but the fact that most choose to monetise their investment at that point in no way demonstrates that the software business has ceased to be.
Google and Facebook are starting to get the same kind of regulatory scrutiny over their attempts to take over the world that IBM and Micrsoft went through when the software business was new. It will be interesting to see where the dust settles, but if collecting and retaining vast quantities of data to sell to advertisers is the new gold rush then it doesn't behove smaller companies to ditch their business plan and blindly follow the herd.
I was going to write a tirade...
I was going to write a tirade about the many idiocies of this presentation but you saved me the trouble, and for that, I thank you.
Well, the main value of this article...
...consists in my opinion in having elicited a thoughtful critique such as Bernard's. Well said that man.
Also... its not Data... as Mr. Core dump said... its *marketing data*, so, no difference there. You can make money two ways: sell a product (front-end) or sell ads (back-end).
Microsoft made a shitload of money selling products to consumers, but people got sick of paying high fees for the same stuff over and over, and piracy was too easy, so that model died. Salesforce.com makes a shitload of money *renting* software to people. Being a web-app, it is not so easy to pirate, so that model works.
Dell, IBM, HP, Apple sell hardware - also not easy to steal, and people *feel* like it is worth paying for, so they make the most money out of anyone!
Selling marketing data works too. But not nearly as well. Total revenue from PC + servers + phones: hudrends of billions! Dell, HP, IBM, HTC, Samsung, and so on. Total revenue from marketing data? Google + Facebook = $10 billion... maybe? Granted, at a higher profit margin, but not nearly enough to compensate.
Market cap, in this context, is meaningless.
When the principles start bailing out, the PPS will plummet.
It's tulips and the mid-1630's all over again.
I'd comment on who I'm shorting, but I suspect the .gov would get mad at me :-)
Ok, my last attempt to post to this article apparently hurt someone's feelings, so I'll try it again, without the humor.
1) Data without understanding is meaningless. Worse than that, excess data can actually hide the meaning you are looking for if you don't have a method of extracting it.
2) Most enormous collections of data collected without prior intent fall in this category.
3) Storing data, analyzing data, etc. all has an associated cost. If you don't have a business model to sustain you (or some bizarre bubble to ride), you are going to fall over under the weight long before you become viable.
4) A mistake in the early stages can doom the validity, or at least the usefulness, of your dataset, leaving you back at step one in the collections process about when you expected to start producing your "real product."
5a) Finally, there is no great change here. Those who do sucessfully get knowledge, or useful data, out of the dross will have people falling over their feet to do business with them. This has been the case for some time, and I'm really curious how many readers of El Reg are surprised at this notion.
5b) And software is /still/ viable. It is nothing short of bizarre for any company to enter the rolls of Fortune 500 in the course of a decade; the notion that companies such as Google are doing better than RedHat shouldn't be taken to mean that software is dead. Besides, RedHat is a horrible example - like most Open Source companies, they aren't really a software company, they are a support company. Try comparing Google to Microsoft and see what you come up with.
In respectful disagreement,
I don't care who corrals the data or writes the software, as long as we can get the world off of Windows already.
Some software writers get more fulfillment by releaseing open source than they do through their day jobs as software engineers. A cheering thought, but not an easy concept on which to base a business presentation.
- Fee fie Firefox: Mozilla's lawyers probe Dell over browser install charge
- Did Apple's iOS make you physically SICK? Try swallowing version 7.1
- Pics Indestructible Death Stars blow up planets using glowing KILL RAY
- Neil Young touts MP3 player that's no Piece of Crap
- Review Distro diaspora: Four flavours of Ubuntu unpacked