Section 7.2. A Brief History of Software

7.2. A Brief History of Software

Once upon a time, software did not matterhardware did. Software was something that hardware vendors wrote to help them sell hardware. Little more. Software was important because it made hardware operate, but customers understood that they were paying for hardware, and not the software that ran on top of it. (This is still somewhat true of certain areas of the embedded software market.)

As hardware commodified, software grew in importance as a differentiator with these same customers. Not all hardware commodified at the same pace: Solaris servers, for example, handled a workload in a way that commodified hardware could not, and Sun consequently charged a premium. But the real premium increasingly gravitated up the IT stack to the applications that people ran on their hardware. Hardware was important, but only because the applications had to run on something. With the rise of Dell and other commodifiers, however, IT buyers came to care less and less about the "guts" of their computing experiencesthey bought systems for the applications they could run, for the productivity they could achieve.

No single company did more to send the applications trend into hyperdrive than Microsoft. Microsoft made software easily consumable by the masses. By simplifying computing, and by doing so at a dramatically lower cost, Microsoft grew the market by competing against nonconsumption and underconsumption, inviting multitudes of average users into the hitherto closed world of computing. Microsoft's Visual Basic lowered the bar of expertise to be a proficient developer, and its Office suite created a market of home and business users who suddenly could create brochures, quality letterhead, etc. Whatever open source developers' feelings about Microsoft, they should acknowledge Microsoft as the natural parent to their own brand of commodification.

For this is what open source is doing: commodifying software. We are now at the point where mainstream software is becoming commodified by the open source community, perhaps pushing all value to the services that support hardware and software. Microsoft, in a sense, is being out-Microsofted.

In this world, customers benefit as vendors focus on solving their business problems, instead of innovating new methods to achieve customer lock-in. Much of today's IT world is composed of expensive, monolithic software "solutions" that end up creating complexity and integration problems, instead of resolving customer problems. That is, today's IT industry is a morass of conflicting standards, complex installations, tepid product interoperability, and expenseall products of the industry's Wild West "level of thinking" in its adolescent years. Increasingly, however, customers are tired of subsidizing the disarray and are turning to open source as a way to get more for less. As open source proliferates, the cost of infrastructure software will plummet, freeing up resources that the CIO can spend on resolving application requirements up the stack.

Vendors, for their part, also benefit from increased use of open source, because it removes the "IP safety blanket." Because code is open, vendors must find innovative ways to satisfy and "lock in" customers. Copyright and patent are fine, but they pit the vendor in an adversarial relationship with the customer, whereas open source control mechanisms tend to force vendors to win by intimately understanding and fixing their customers' business problems. In addition, this commodification of IT will push vendors to move up the stack (and off the stack, into services) to deliver increased customer loyalty/value. Finally, as prices for software drop to match the drop in hardware costs, more buyers will enter the market, increasing the size of the market. Everyone wins.