Bill Gates Argues 'Supply and Demand' Doesn't Apply To Software (gatesnotes.com) 237
"Not enough people are paying attention to this economic trend," writes Bill Gates, challenging the widespread use of forecasts and policies based on a "supply and demand" economic model. An anonymous reader quotes the Gates Notes blog:
Software doesn't work like this. Microsoft might spend a lot of money to develop the first unit of a new program, but every unit after that is virtually free to produce. Unlike the goods that powered our economy in the past, software is an intangible asset. And software isn't the only example: data, insurance, e-books, even movies work in similar ways.
The portion of the world's economy that doesn't fit the old model just keeps getting larger. That has major implications for everything from tax law to economic policy to which cities thrive and which cities fall behind, but in general, the rules that govern the economy haven't kept up. This is one of the biggest trends in the global economy that isn't getting enough attention. If you want to understand why this matters, the brilliant new book Capitalism Without Capital by Jonathan Haskel and Stian Westlake is about as good an explanation as I've seen.... They don't act like there's something evil about the trend or prescribe hard policy solutions. Instead they take the time to convince you why this transition is important and offer broad ideas about what countries can do to keep up in a world where the "Ec 10" supply and demand chart is increasingly irrelevant.
"What the book reinforced for me is that lawmakers need to adjust their economic policymaking to reflect these new realities," Gates writes, adding "a lot has changed since the 1980s. It's time the way we think about the economy does, too."
The portion of the world's economy that doesn't fit the old model just keeps getting larger. That has major implications for everything from tax law to economic policy to which cities thrive and which cities fall behind, but in general, the rules that govern the economy haven't kept up. This is one of the biggest trends in the global economy that isn't getting enough attention. If you want to understand why this matters, the brilliant new book Capitalism Without Capital by Jonathan Haskel and Stian Westlake is about as good an explanation as I've seen.... They don't act like there's something evil about the trend or prescribe hard policy solutions. Instead they take the time to convince you why this transition is important and offer broad ideas about what countries can do to keep up in a world where the "Ec 10" supply and demand chart is increasingly irrelevant.
"What the book reinforced for me is that lawmakers need to adjust their economic policymaking to reflect these new realities," Gates writes, adding "a lot has changed since the 1980s. It's time the way we think about the economy does, too."
Companies don't share (Score:5, Insightful)
Re:Companies don't share (Score:5, Interesting)
eBooks are less expensive but eBooks aren't a new product, they're just a new package for the same product in the same market (books). The price doesn't go down because eBooks represent a production/distribution innovation by book publishers and distributors.
I also think the argument for near zero production cost for new copies of software is too oversimplified. Software that is sold/licensed involves a complex licensing system that requires tracking and monitoring of software licenses to prevent the end-user from exploiting free copies. These days it also seems to involve a persistent long-term effort to provide bug fixes and security updates for software that's already been produced.
I'd kind of lump licensing and patches as part of the production cost of software, even though it doesn't align with the reality that mechanically duplicating existing software is essentially free and it isn't a requirement for actually producing additional copies. But those non-production costs seem like part of the long-term life cycle of the product, and I'm guessing the fact that software vendors are capable of making a profit means that the economics of software shows that it's not so mysterious that vendors can't find a pricing model.
Re:Companies don't share (Score:5, Insightful)
These days it also seems to involve a persistent long-term effort to provide bug fixes and security updates for software that's already been produced.
And here is where supply/demand kicks in again. The demand isn't for the copy of software, but for humans: Customer support, quality control and management that can understand the problem a customer has, and developers who can maintain other people's old code. Those are in limited supply, and far from free.
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The demand is also for the original effort put in the development.
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The demand is also for the original effort put in the development.
That demand has already been met when software is released, and is out of the equation.
But that doesn't stop other demands for which there is a limited supply.
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The demand is also for the original effort put in the development.
That demand has already been met when software is released, and is out of the equation.
Only if you pretend there's only one software package in the world. But that's not the case. There are thousands of them in active use, and many of them are competitors. The price is set by the cost and the expected profit. The expected profit leads publishers to set pricing at levels that controls demand. When there is no competition, the price can be set at whatever point will maximize profit based on how many customers are in the market, and how many of them will purchase the product at a given price poi
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That demand has already been met when software is released, and is out of the equation. But that doesn't stop other demands for which there is a limited supply.
Only because people are dumb enough to accept that. Software which automates labor necessarily keeps on being in demand, the authors are just too dim to get paid for it more than once.
...which is why software vendors are so eager to move to a subscription model, where the customers never stop paying and yet never own what they're paying for.
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And I shouldn't own a tractor either. I'm only licensing the right to use it. [slashdot.org]
You're just cherry-picking the simplest example on a slippery slope to hell.
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Exactly while development isn’t cheap, it can be made up with volume. But with that volume there is a huge amount of support that will be demanded. We can’t just sell an app for $0.25 expecting to reap in money. Because applications are never done. There are fixes patches security fixes... and people would rather pay a fixed amount or a subscription vs being nickeled and dimed for every fix and second of support.
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Sometimes yes, sometimes no. You made a bland, generic over-simplification. There's plenty of software (programs/apps/whatever) with no CS at all. People buy the program and will do so even w/o CS if they want it.
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Why do you think there is a big push for automation and efficiency management? Companies hate hiring people and paying livable wages. One place there used to be an engineer to take petroleum samples at $85,000 a year. Now a guy making $10/hr does it by following a script in Excel and just enters data that he has no idea what it means.
AI will mean no call centers in 10 years either as it will all be menu based with no one to talk to to pester the company owners. It is the way of the future to cut costs and r
Re:Companies don't share (Score:5, Insightful)
Software that is sold/licensed involves a complex licensing system that requires tracking and monitoring of software licenses to prevent the end-user from exploiting free copies.
That... sounds an awful lot like having to pay for the ammo used in your own execution. "We could distribute this software - almost - for free, but we incur enormous costs enforcing these licenses. And lawyers ain't exactly free, you know". That doesn't sound right.
These days it also seems to involve a persistent long-term effort to provide bug fixes and security updates for software that's already been produced.
That's fair enough. You could also charge for updates though. As for the companies' profits, of course they seem to want to maximize them so the next step is that you'll have to pay a monthly rent for that piece of software that has a near zero marginal cost to produce...
Competition Absent (Score:2)
The price doesn't go down because eBooks represent a production/distribution innovation by book publishers and distributors.
Not quite. The price does not go down (or ve goes up) because people are willing to pay more for the convenience of being instantly able to purchase any book they want. Prices for things are set by what the market will bear, not how much it cost to produce. Successful products are ones where the price is a lot higher than the cost to produce.
Competition is what normally prevents the gap between production costs and selling price remaining large but for ebooks each book has its own monopoly controlled by
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Utterly incorrect. I have eighteen titles available in both formats (paper and ebook) and in each format I and I alone determine the price. Ebooks (self-publishing) are the antithesis of a "monopoly controlled by a large publisher".
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When every human on Earth is fed, clothed, sheltered, educated and entertained, THEN you can have this. Until such a time as that, capitalism in this form is absolutely immoral. Price should ALWAYS be tied to cost to produce or all we have is a world constantly looking to fuck each other over. We would get a hell of a lot farther if we put at least some controls on greed.
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Capitalism can be immoral. There's not an issue with having somewhat higher prices. The issue is having high prices for a captive market.
Usually from a monopoly or duopoly.
Say you can dance. And you want $50 an hour.
Is it moral for everyone else to say, "Nope $10 is fair and you *must* dance 40 hours a week to entertain us as long as it doesn't hurt you physically"? I don't think so- that's a form of slavery which is also immoral.
Capitalism breaks down when individual actors get too big. As long as yo
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Traditional book publishers did not do the eBook innovation. In fact, they fought it tooth and nail because eBooks allow single, stand alone authors to publish and sell at the prices they deemed fit, cutting out book publishers and distributors (a throttle more than an avenue) entirely.
A much more accurate statement would be:
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Ebooks are an entirely new business model. Indefinite rentals that limit your ability to resell or lend them. Consumers trade those defects for convenience.
Re:Companies don't share (Score:5, Insightful)
A bit of a background on book prices. The bottomline is that they are far too low.
Apart from a few very prolific and highly advertised best-seller authors, for most authors book prices are way too low in comparison to the amount of work that goes into writing a book. To me as a hobby author writing a novel takes 1-2 years of full spare time dedication - basically all the time during every weekend. (That's about equivalent to 1/2 year as a full-time author, which is often stretched to a year for better quality control.) Publishing at Amazon, which everybody hates and despises but is the only place where you can actually make sales, at a competitive price gives me a profit of about 80 cents per book. You can calculate yourself how many sales I'd have to make in order to make a living of that, and authors at publishers get much less per book, of course.
Add to this that everybody hates Amazon and that ebooks are inferior in terms of anything that is part of the art of book-making but not content (typography, page geometry, design, cover design, illustrations), and it should become obvious why nobody who writes or publishes books has a particular interest in making ebooks super-cheap. Books are already much too cheap in general if you look at their production from a business point of view. That's also the reason why small publishers die and only large ones like Random House prevail. I'm not making any claims about whether that's good or bad, I'm just saying that's the way it is.
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A bit of a background on book prices. The bottomline is that they are far too low.
By what measure? What you would like to receive for it?
Apart from a few very prolific and highly advertised best-seller authors, for most authors book prices are way too low in comparison to the amount of work that goes into writing a book.
Surely that's been true for most of the history of writing, or for that matter human history?
The step that you pay. (Score:2)
To me as a hobby author writing a novel takes 1-2 years of full spare time dedication
And that's not even factoring in all the other labor-intensives step that must happen before a final book appear (like proof-reading by the publishing company, etc.)
The problem is that readers aren't paying any of these steps directly.
For historical reason, the part where a reader pay, is to get a copy, because for obvious historical reason, that used to a pretty complex and limiting one. You paid a publisher or a distributor to make copy, and that one in turn pays all the other necessary steps that bring t
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Only if you don't consider making a living to be an ongoing process but one that stops at what someone other than the author considers a suitable limit per item.
No. It's gains by volume. (am serious)
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I can't speak for others but at least insofar as novels are concerned, I don't think that anybody writes them primarily for the money. It's for fun or a kind of obsession. However, that doesn't mean that authors shouldn't get more money.
Just because you do something time consuming, for fun, doesn't mean you should get paid for it - even if others enjoy what you create. If you raise your prices, then others will find other books that are less expensive, and also enjoyable. It's just the substitution effe
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Stop thinking it’s cost to produce relates to its price.
I just got some pork chops for less then $2.00 for my family dinner. Farmers are currently selling pork at a loss, because of trade sanctions.
Also I will get things that may cost pennies to make are marked up very high because it may be more difficult to get the skills to make it and sell it.
While the cost of books is cheaper electronically there is a full infrastructure behind keeping that book available.
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That's what the big 5 publishers want you to do, buy a paper book. They're pricing their ebooks to try and keep their paper sales alive.
Indie publishers have much more expensive paper pricing costs and thus price their ebooks based on supply and demand to maximize revenue, so they're typically half or even a third in price of the tradpub books. That's why in most genres they're eating the big 5 publishers alive in ebooks and why Indie ebooks have exploded recently while tradpub ebook sales are declining. Re
Re:Companies don't share (Score:5, Insightful)
eBooks are less expensive to produce, yet they usually cost more than the real book.
They're not just less-expensive... there's essentially no "aftermarket" --- you don't see a market for "used eBooks" people already ready -- because of DRM there's essentially no way to lend them to friends (except when provided with restrictions as a gimmick) or sell off eBooks you already read.. So the publishers have less competition for their readers, essentially captive audience, and the product in consumers' hands has less worth due to inherent lack of resale value --- also less material cost than physical book and not being readable without electricity, working reader tool, etc.
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Best points I've seen listed yet.
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While socialists and fascists tend to believe that the price of a good is "cost of production + markup" (and they can save the markup if they nationalize), that's not how prices actually work.
eBooks have brought the cost of books down tremendously. You can get free or near free books on just about any subject. When books cos
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While socialists and fascists tend to believe that the price of a good is "cost of production + markup" (and they can save the markup if they nationalize), that's not how prices actually work.
Oh sigh. More of this fucking idiocy.
Fascism is a conservative, rightwing ideology which has been and is supported and encouraged by capitalism. Fascists have suppressed and killed socialists since its inception though it briefly utilized the populist ideas of socialism to gain traction with the lefties and centrists until it was too late.
This ghastly misuse of copyright and blatant manipulation of markets is par for the course of an immoral capitalist system and no amount of "fixing" will make one damned d
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Fascism is a virulently anti-capitalist ideology closely linked to modernism and early 20th century American progressivism. It is neither "supported by" nor "encouraged by" free market capitalism. Mussolini and many of the German fascists were former communists. This is how fascists described themselves:
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Nope, eBooks are actually more expensive to produce.
The cost of publishing books is in the editing and layout, not in the printing, especially when you're talking about long run paperback black and white books (not text books, which are an exception due to needing expensive papers, inks and techniques, though even there the massive cost of DTP work is still a huge component).
eBooks increase the cost because while the cost of paper is saved, the cost of having to do layout and editing in such a way that you
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Nope, eBooks are actually more expensive to produce.
The cost of publishing books is in the editing and layout, not
eBooks increase the cost because while the cost of paper is saved, the cost of having to do layout and editing in such a way that you support lots of different screen sizes, fonts, and sizes makes the actual publishing step much more complex.
What incredible horseshit. What, you think the publisher's software team takes each book and hand-tweaks the author's original submission? Once you've developed a tool [cough cough Calibre cough] there's zero cost to spitting out soft copies compatible with each and every device.
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Re: Companies don't share (Score:2)
Why can't economists change their thinking? (Score:3)
Interesting story. I wish the Slashdot discussion lived up to it, but so far I haven't found any trace. Usual searches, etc.
It would be nice to blame this opening post. Too bad it buries the actual insight, notwithstanding the typical first-post mod. The value and price of the ebook reflects supply and demand, but these are not the supplies and demands you are looking for.
The suckers... Er, Of course I mean the customers are paying extra for the convenience. Same as it ever was if you think about it wrong.
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They do ... to the shareholders. If you are not rich enough to own stocks than that is your problem as you are never entitled to other people's money.
Re:Companies don't share (Score:5, Informative)
Cost to produce one of my paperbacks (526 pages) - $11.77.
Cost to produce same book in hardback - $23.17.
Clearly, you are wrong.
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What quantity are we talking? Volume of scale doesn't just affect a single item, but can also affect the differential between items due to tooling costs and setup.
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Billy? Is it senility or ... (Score:5, Insightful)
You just explained what we obviously knew for at the very least 120 years, since it's basically the reason behind the Berne Convention [wikipedia.org].
Did you just run out of stuff to say, or what's the motivation behind it?
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You just explained what we obviously knew for at the very least 120 years, since it's basically the reason behind the Berne Convention. Did you just run out of stuff to say, or what's the motivation behind it?
But up until not that long ago, you had to deliver some form of physical manifestation whether it was a paper book, a CD, a DVD or something like that which had "manufacturing-like" properties like production runs, distribution logistics and so on. In practice you only had access to what was profitable to have in stock near you and there was a whole supply chain that would have to decide to make and distribute more. Even if you could make some kind of special order just finding it was very hard before the I
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Not really. Back in about 1970, I wanted a book - Das Tierreich, Mantidae. Spelling unsure as I no longer have it. Point is, it was rare at the time and all I had to do was send a letter to a book searcher and viola, I was able to purchase it. Time delay. Yes. Very hard? No.
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You just explained what we obviously knew for at the very least 120 years, since it's basically the reason behind the Berne Convention [wikipedia.org].
The big pushers for copyright, copyright extensions, and copyright "reform" (read: more limitations) were always the publishers, not the authors. Copyright in it's current incarnation benefits mostly the middlemen.
He is half right (Score:5, Interesting)
Prices are controlled in many cases by the whims of the copyright owners. If Microsoft says you have to pay them $200 (hypothetically) for a (legal) copy of Windows or Office, that is so. But if the difference to alternatives gets too large, people might accept the effort to switch to something else. A case of price elastic demand, quite well known in traditional economy.
Some anecdotal evidence about myself:
I have switched to Libre office myself for private use, partly for financial reasons, partly for political ones (I really don't want to feed Microsoft money). Also planning to use Linux when support for Win7 runs out.
But if Microsoft were to drop the price of Windows to $20, laziness might win out and keep me on Windows. On Libre Office they have lost me permanently, as I already have put in that effort to get familiar with the new tool. Wasn't much effort either, only inserting images into documents is still a bit cumbersome and annoying.
Where Bill Gates is right are those cases where a satisfactory free alternative already exists and people can adopt it effortlessly. In those cases, the opportunity to make money from the main product is gone. Perhaps you can still earn money from add-ons to the free product.
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Prices are controlled in many cases by the whims of the copyright owners.
Prices are ALWAYS controlled by the whim of the seller.
The ones still in business, however, tend to adjust them according to what they perceive makes them the most money (and are limited to those who guess well enough to make more than the spend, or haven't been in business long enough to have spent all they could raise, or are obtaining some other benefit that keeps them willing to continue).
Combine that with the willingness to pay of
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Prices are ALWAYS controlled by the whim of the seller.
That's only true when the seller has a monopoly on the product, or to a lesser extent when the product is controlled by a cartel. In a competitive market sellers don't get to set prices according to their own whims; if the price is much above the cost of production, resulting in an economic profit, then more producers will join in until the extra supply drives down the price.
The problem is copyright, a mechanism specifically designed to create monopolies in the market for distribution of creative works. Wit
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Right now, Windows 10 Pro costs around 120 Euros in Germany (System Builder which is legal to unbundle here, no dubious ESD key). That's around $140.
I am neither a student nor employed in a company that has something like a HUP going, so for me it would be the full price of the SB edition. It seems that Microsoft think they have piracy mostly under control and Linux is not a threat.
For now, they might even be right about the latter. Linux is running on a lot servers, embedded and mobile devices (low level b
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For now, they might even be right about the latter. Linux is running on a lot servers, embedded and mobile devices (low level basis of Android), but on the desktop the market share remains small. The desktop and part of the server market happens to be where Microsoft earns most of its money.
I think Linux is the only reason they still support windows 7 the little bit that they do. They realized cutting XP support didn't get everybody to switch to even 7, and there is testimony all over the internet and /. of people even putting their parents and other family on linux once windows 7 support ends. So I think that there is a chance we either see Windows 7 live on another decade, or they lose a decent chunk of their windows base to Linux and leave the other chunk vulnerable.
What a load of hooey (Score:2)
That's the same reason that big pharma uses to overcharge its customers. It is nothing new, nor did Mr Gates have some magical revelation. He is just now noticing what the pharma industry (and others) have known for decades.
Re:What a load of hooey (Score:5, Interesting)
Big pharma is only able to overcharge because the FDA creates a virtual monopoly, through its costly and lengthy process at the end of which very few companies are allowed to make a drug. Try to make an Epi-pen and sell it, it only costs like $30 to make. Auto-injectors were created in the 1970's and the patents on it has expired a long time ago. We have no overcharge issues with non-prescription (non-FDA monopoly) drugs.
https://mises.org/wire/lack-ep... [mises.org]
https://www.cnbc.com/2018/08/1... [cnbc.com]
No hooey. They are the same situation. (Score:3)
Big pharma is only able to overcharge because the FDA creates a virtual monopoly, through its costly and lengthy process at the end of which very few companies are allowed to make a drug.
Remove the "virtual" and "costly and lengthly", substitute "no other" for "very few", and you've described the relevant characteristics of copyright. So it looks to me like the grandfather post is non-hooey.
Try to make an Epi-pen and sell it, it only costs like $30 to make [and patents have expired]
Aside: There is now an
Free to produce != cost free (Score:2)
Microsoft might spend a lot of money to develop the first unit of a new program, but every unit after that is virtually free to produce
Although that doesn't mean there are no costs.
There are support costs, distribution costs, the technical deficit cost from bugs, patches, security holes, backwards compatibility and future integration-ability.
So while there may not be customer supply-and-demand, there is certainly a cost to the supply (and demand) of other factors. Not the least is finding and keeping the talent to support all this stuff through its lifetime.
FOSS is all-out marxism at its best. (Score:4, Interesting)
Everyone contributes what they want, everyone takes what they need and the world improves over it.
You can only have that with digital goods that can be multiplied instantaniously with basically zero cost.
That's why proprietary software always dies out in the long run and loses over to FOSS eventually.
Re:FOSS is all-out marxism at its best. (Score:5, Insightful)
Everyone contributes what they want, everyone takes what they need and the world improves over it.
You can only have that with digital goods that can be multiplied instantaniously with basically zero cost.
That's why proprietary software always dies out in the long run and loses over to FOSS eventually.
While I agree that FOSS has its place, I think you are overestimating its capabilities. There are many closed source programs that will never be made FOSS for various reasons. As an example my day job involves writing code for GE Rx3i PLCs using GE's Proficy Machine Edition. This is a closed source IDE targeting a specific companies custom hardware. And while it keeps me busy I know that GE only has a small market share - meaning that there is no huge demand to replicate its code (even if possible) so there will never be any FOSS version. And from an end user business sense the IDE is basically a tool of the trade that can be easily written off in the process of using it to generate revenue.
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FOSS PLC-s are a thing though, admittedly, they are not very good compared to commercial variants, but they do exist. And given that PC based PLC-s are very successful these days, there is hope that eventually there will be a FOSS variant that works well enough to use in actual industrial settings.
But it's a good example that exposes the weakness of open source development. FOSS might come out on top eventually, but the questions is, how far away is that "eventually", a year, a decade, more? Given enough incentive and developers a competitive PC based PLC could be made out of open source components today, all of it exists. It's not like there is some fundamental show-stopper in the way. It's just that there is a ton on busywork to put it all together, iron out all the kinks and package it nicely with a bow on top.
My own minor effort culminated in this: https://www.youtube.com/watch?... [youtube.com]
That's completely FOSS controlled. The problem is, getting it to work at all was sketchy as all hell and took couple of days of banging my head against the wall, doing the same task with proprietary software is a trivial exercise of few minutes.
I mostly agree with all of this, but one thing I didn't mention in my original post is that I am also dealing with man rated safety systems and inherently safe PLCs. No one in their right mind is ever going to sign off on system that isn't certified at the appropriate SIL level. That in itself is a hard limit that FOSS can't cross by the very nature of the requirements.
On the other hand there several companies building rugged Arduinos for industrial settings.
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That's why proprietary software always dies out in the long run and loses over to FOSS eventually.
FOSS has its own vulnerabilities. It can be taken over by malicious or irrational developers who don't serve the needs of users, for example, which is how Firefox became such a clusterfuck (the latter.) Firefox would be the dominant browser today if it had stuck to its core mission instead of fluffing itself up to look fancier with more features people don't want. My favorite window decorator emerald was abandoned because the underlying APIs it depended upon changed in ways that made it a hassle to maintain
Video games, Netflix, and TurboTax (Score:2)
That's why proprietary software always dies out in the long run and loses over to FOSS eventually.
"Always" is a strong word. When has this been the case in, for example, video games or streaming players for rented movies or income tax return calculation software? Those segments of the software industry have peculiarities that cause them to differ from the segments where free software shines: libraries and other tools with stable, well-defined requirements.
Ethics Violation that now biting the AI Industry (Score:2, Troll)
Ethics Violation via - How to become wealthy is make people need you - bill gates.
How did he do that? He cheated the users by not providing the three primary user interfaces and yelling piracy as well as getting the rest of the software industry to do the same with the money he was making with the cheat, they wanted to make the money gobs too.
Cheat the users and now the AI industry needs the users but the users don't care and they don't even know it and this extends to a software industry slowly crashing li
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Ethics Violation via - How to become wealthy is make people need you - bill gates.
How did he do that? He cheated the users by not providing the three primary user interfaces and yelling piracy as well as getting the rest of the software industry to do the same with the money he was making with the cheat, they wanted to make the money gobs too.
Cheat the users and now the AI industry needs the users but the users don't care and they don't even know it and this extends to a software industry slowly crashing li
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Writing here about a software industry slow crash and a hint of it actually happens. The second post (reply to myself) was what I wrote for my initial post. Something changed it. Let's call it "Overcomplexifabulication."
Of course it doesn't (Score:5, Insightful)
Obviously software doesn't follow the old rules of supply and demand. Going back to the invention of copyright, the idea was to allow authors to create artificial scarcity of something that could be easily replicated. It was to take a thing of virtually unlimited supply, and shoehorn it into the model of supply and demand.
And though it's not really a "software" problem, the copyright system stops working when the cost of replication goes from "extremely cheap" to "virtually free". We've tried to keep the shoehorn by inventing DRM and making new laws, but it's not really working.
Worse, it's detrimental to society. The indefinite extension of copyright, combined with DRM and incompatibilities, means that we're going to lose the history of our intellectual works. You can still look at a 500 year old painting or read a 500 year old book, but it's not clear whether you'll be able to try current software or play current video games 500 years from now. It's a problem that, unfortunately, it doesn't seem to be a problem that people are considering when they create DRM or modify copyright law.
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That makes it easier for the politicians to re-write history in 500 years.
Really? (Score:5, Funny)
And then you click the Amazon link and you see these prices:
Capitalism without Capital: The Rise of the Intangible Economy
Hardcover $29.95 (physical copy)
Paperback $18.95 (physical copy)
Kindle $23.79 (digital copy)
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They clearly mail you out a new Kindle with which to read the ebook.
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The cost of the Kindle version should be the price of the hardcover/paperback minus the cost of making those, plus a tiny Amazon fee on top for the hosting/bandwidth/etc.
yeah, software requires lots of up front capital (Score:2)
Yes, and this "a lot of money to develop the first unit" is what is risky and what capitalists actually invest in.
But the premise is false too, because much of the software industry is a service industry, meaning that after the initial sale, there is support and maintenance. This may be a foreign concept to Microsoft, but it is a business ne
Everything starts with a large capital investment (Score:2)
It doesn't matter if it's some factory where the production line starts at processing raw ore and ends where steel pipes come out, or a company that makes software or movies. Both require a large initial investment.
SW is always a race to zero (Score:2)
Not So Fast (Score:2)
"Software doesn't work like this. Microsoft might spend a lot of money to develop the first unit of a new program, but every unit after that is virtually free to produce."
While that is true, there is a significant cost to supporting customers, the more customers, the higher the cost. Well, if you actually provide support, that is.
Why the hate? dumbest comments I've seen recently (Score:4, Insightful)
1)The marginal cost to software (and books, and movies and some financial services) is almost zero. Yes, there is some small cost to produce a physical copy and licensing might cost pennies. Patches are not a marginal cost, you create the patch whether you sell one or one million copies. Customer support is customer support it is separate and most software I use, I've never used any support for.
2) And this is the big point. The part of the economy that works on this new model of low or almost zero marginal cost is now significant.
2 is new and it has significant impact on how the economy will function and we need to change regulations and other behaviours because of this.
Ha ha ha hah ah.. oh ho ho ho ho.. (Score:2)
Yes of course supply and demand applies unless you have a monopoly.
It's why I use an opensource stack on Windows and when windows goes to a subscription based operating system where they are the owners, I'll go to linux 100%. I may go sooner than that actually.
I *OWN* my computer damn it.
So while I have a bright shiny Windows 2010 full Office install DVD, it sits unopened and i use Libreoffice writer, calc, etc. And Gimp. And Audacity, VLC.
Anyone who would like to recommend any other good open source che
not just software (Score:2)
The marginal cost of manufacturing physical goods has dropped steadily for centuries. The cost to develop a new physical product has risen.
Pharmaceuticals and electronics are good examples of this. The cost to manufacture one pill or one microchip is tiny once the tooling has been bought and validated. The cost to design, build, and validate that tooling is very high.
This isn't new, at all.There are several ways to account for high up-front costs and low marginal cost.
Gates argument repackaged (Score:2)
Back, back...way back at the beginning of DOS was the claim that real capital was made selling it and keeping it to sell again... ad infinitum
Virtually free, really ? (Score:2)
Marketing, sales, distribution, support : these activities are not free, they increase with the number of items sold.
Re: (Score:2)
Transparency? Research? (Score:2)
What would be really interesting, if the data can be attained , I don't know if it is available, would be to look at actual cost. If you take 30 big software companies, and ask , what kind of profit do they make and when, what are their actual cost ( overhead, employees, help desk etc, including research and loss from products that bomb). What does it actually cost to run a successful software company and what is the minum unit price you could sell successful software at and still break even/ make a 50% p
Re:We must all worship the backdoor socialism (Score:5, Insightful)
The thing people have wrong about software is that it's not the copy of the executable that is the scarce and valuable resources - it's the programmers (although, decreasingly so; actual coding is indeed becoming a commodity) and, more importantly, the expertise of knowing what kind of software to make and the knowledge of how to best use that software.
There is still supply and demand in an "information economy" - it's just that people tend to misidentify the thing that is scarce.
The ultimate zero-sum game (Score:2)
True. Not to mention the ultimate zero-sum game, which is choice. Some software designers make sensible choices; if that does not work for you, your only option is to code up your own package. This means that supply and demand are measured on the level of what fits the need for a given solution as well.
Re: (Score:2)
The goal to civilization is too.
1. Keep people alive
2. Keep people productive
We learned to group with other people often with diverse needs and skills to provide protection for the hazards of the world.
A mammoth could feed 100 people.
A dozen of the strogest and fastest could take a mammoth down. But after that hunt they will be worn out. So we have other people who is foot at prepping the food cooking it. Then you need to feed children who will be needed to replace these roles. Other people will be needed
Cellular structure (Score:2)
Why not divide into groups of 100 (or 150 -- Dunbar's number?) then, and have those managed by a hierarchy above them? A cellular design like this mimics the tactics of revolutionary cells.
Re: (Score:2)
There is too much interaction between these groups. of 150. This would create cultural silos, Where they would be competing against each other vs sharing with each other. If you work for a large business, which works like this, and you find friction between IT vs Finance or HR.
Software as subscription/service (Score:2)
He seems to have forgotten that the whole industry was getting very excited about software as either a service or a subscription because it was not making enough money from single-time sales because of support costs, usually patching the various security holes and glitches that the bureaucracy and its low-cost code stooges overlooked.
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Bill Gates doesn't understand economics. There have always been recurring and non-recurring costs to produce a thing. He thinks that the economic basics have changed just because the recurring cost is now very small compared to the non-recurring costs. The only economic difference is that the supply curve looks much different; the law of supply and demand remains as true as it ever was.
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HL3 confirmed!
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To be fair, he actually is giving a lot of his money to support a lot of things that are completely unrelated to software and computers.
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Well, at least it was free.
Thank you.
Re:One word -- support. (Score:4, Insightful)
On the contrary. Support is where you should be making your money.
On the other hand, when support is you main income then you'll do everything you can to make your software complicated and hard to use.
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On the other hand, when support is you main income then you'll do everything you can to make your software complicated and hard to use..
Actually you'll make it easy enough to use to get them hooked before it starts to bite them, and keep the support costs low enough to be perceived as cheaper than switching and incurring learning-curve costs, but high enough to gouge them.
This is the same sort of pricing strategy as that of classic manufactured goods.
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Oracle is making huge amounts of money from my employer by ending support for the version of their product that works and is the foundation for our business processes, and by offering 'newer' versions are deliberately broken products that they can later charge us to 'fix'.
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Well, you're half-right.
Supply does not apply anymore.
Demand is limited to the number of compatible devices.
And for specialized software, demand is limited to a subset of users of said compatible devices.
Re: (Score:2)
I think you inhaled a bit too much of this blue, vanilla flavoured fume.
Re:Gates is wrong, obviously. (Score:5, Insightful)
every maker of a piece of proprietary software has a monopoly on that software
It's called rent seeking [wikipedia.org]. And I don't think Gates really missed it. He just tip-toed around his industries need to control supplies so as to maintain profits. Lest some governments wake up to that and implement taxes and regulations to discourage it beyond a reasonable return on investment
Heaven forbid we go to a VAT tax [wikipedia.org], where companies with zero cost products end up paying stiff taxes. Or patent/copyright terms are reduced to encourage competition. Or 'intellectual property' is assessed actual property taxes.
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Learn english.
Here, here!
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But, he is wrong. So many other products work just like software.
It costs a mine a millions to produce the first result, and only less than the result's market price to produce the next one.
It cost Henry Ford.. maybe 500x to develop the first model T than the next ones. Great.
It costs movies a few hundred million to develop the premier, and only a few hundred to a few thousand to show it in the next movie theatre.
It costs Genentec a few billion times more to develop the first pill, than it does the next pil
Re:its in marketing...duh. (Score:5, Informative)
Haskel and Westlake outline four reasons why intangible investment behaves differently: It’s a sunk cost. If your investment doesn’t pan out, you don’t have physical assets like machinery that you can sell off to recoup some of your money. It tends to create spillovers that can be taken advantage of by rival companies. Uber’s biggest strength is its network of drivers, but it’s not uncommon to meet an Uber driver who also picks up rides for Lyft. It’s more scalable than a physical asset. After the initial expense of the first unit, products can be replicated ad infinitum for next to nothing.