

The Economics of Software - adamc
http://blogs.sun.com/bmc/entry/the_economics_of_software

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forinti
Postgresql is actually good enough to use in enterprise applications. I've
even seen MySQL used in a large retail chain. When I see Oracle used, it's for
one of two reasons: compatibility (lots Forms and PL/SQL code) or a manager
playing safe.

Maybe we should compare software with other types of goods, such as capital or
luxury goods.

~~~
patio11
_Postgresql is actually good enough to use in enterprise applications_

Anecdotally, Postgres is running some "you can't possibly be serious!?!"
applications at some of the largest Japanese companies. The big one we would
point to get to clients to switch from a Certain Enterprise Database is NTT
("the phone company"). They've really adopted it with a vengeance and are
sinking eyepopping amounts of R&D into it.

Databases are not really my thing, and after you get past "bigger than a
payroll system" my ability to comprehend matters of scale drops off fast, but
I nearly hit one of our guests with a face full of tea when he told me a
particular app which they have on postgres.

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Retric
To summarize large scale databases:

A) Running a payroll system is not a difficult software problem. A 400$ pc is
significantly more powerful than the 80's mainframes that ran huge
enterprises. The only real issue with such systems is the terrible state of in
house “enterprise” software.

B) However, for those rare cases where you really need a monster of a database
there are plenty of options. Teradata for example can be used when _hundreds_
of HDD are just not enough.

So while Oracle can scale up (to B), it's rarely used in that capacity simply
because it's not needed (see A). IMO, the only need to use Oracle is when it's
possible to scale rapidly and money is not an issue.

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credo
For a long time, Sun has believed that their business interests (selling
hardware) are served by making software free (or as cheap as possible).

Being aware of that "business interest" provides a lot of context to this post
(which seems to criticize software vendors for the fact that their products
aren't free or that their product-upgrades may not be free).

While Sun's business interest often masquerades as love for the consumer or
for the open-source ideology, this post does deserve some credit for an
acknowledgment that free services generally means a business model where you
charge consumers for support, services, "other software", hardware etc.

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wallflower
It's different for software companies.

> Software companies are required by SFAS No. 86 to capitalize certain
> development costs of software to be sold, leased or otherwise marketed.
> Capitalization occurs once technological feasibility has been reached and
> costs are determined to be recoverable. Capitalization ends and amortization
> begins when the product is available for general release to customers

<http://smartech.gatech.edu/handle/1853/15598>

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tjmaxal
He fails to mention that in the long run, ALL COSTS ARE VARIABLE! So his whole
premise is just an explanation of a very brief moment in time. Also software
does wear out. As Technology increases it eventually becomes obsolete.

~~~
lkozma
But then physical goods wear out AND become obsolete.

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davidw
See also: "Information Rules": <http://www.inforules.com/>

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brc
I would argue that giving away software does involve a cost. There's the
physical cost (maintaining downloads), but the larger cost is foregone
revenue, an opportunity cost. It's a theoretical point, but worth mentioning.

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boris
I wonder how soon the O from FYO will take this post down? For those who
haven't noticed, this post was written in 2004. While I was reading it I
thought this must be the guy's last day at this job.

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adamc
Submitted mostly because I was interested in Hacker News' take on this.

