Thursday, March 30, 2006
The role of telematics in the automotive industry
Monday, March 27, 2006
Three software business models
1) Expand and Dominate. This model, characterised by the likes of Microsoft, SAP and Oracle, is one where the software footprint continually expands. It is heavily reliable on new products: aquiring new customer bases, adding new functionality and ensuring that when customers dig into their pockets, they are digging in deep. The dynamic is very strong in the industry, with the result that smaller companies with good products tend to be driven out of business, or are acquired by software behemoths with surprising speed. The model takes on its behaviour from the recognition that software revenues from any particular product tend to be high growth, tailing off into low growth and stagnation after a relatively short period of time. To sustain high growth rates, companies in this arena need to continually expand and to quickly gain a strong foothold in emerging technologies.
2) Update Harvesting. This model is not so much focused on high growth, as in sustaining the value of the product once it begins to reach maturity. Companies with products that continually need to be updated to stay relevant or content aggregators are best positioned to make money in this market. Examples would include financial software companies like Intuit, news services, premium email services. Pricing is often on a subscription basis.
3) Service Oriented. This model doesn't care so much about the value of the software, but bases its whole business model on the services that come packaged with it. This is the hot spot for the Open Source Community. Example companies in this field include Red Hat, Sun Microsystems and Sugar CRM. Software in this space cannot be trivial - it embraces complexity so that services are required to gain the maximum benefits from the software.
Protecting embedded networks from attack
Monday, March 20, 2006
Pervasive computing and security nightmares
Saturday, March 18, 2006
Business Strategy II : Value Innovation
Thursday, March 16, 2006
Don't stop shipping physical products just yet...
The takeaway for managers involved in software distribution is that a large segment of the end-customer base will not go online for the foreseeable future. Software strategies need to think in terms of hybrid distribution: online and physical.
Death of the CD? Not quite yet...
Tuesday, March 14, 2006
Google's Software Principles
Monday, March 13, 2006
The software business : Google and France
Meanwhile Google is pushing forward with a model to make books available online. They have already embarked on an effort to make out-of-print books available, but they have run into the sand regarding copyrightable material.
Microsoft and Fiat go Embedded
What particularly interested me is that the software will be upgradeable, presumably via the mobile network. "Key feature is the upgradeable software that can accommodate changing customer needs for support of future devices as well as updates to industry standards."
What is Strategy?
I am reading Michael Porter's article "What is Strategy" (Harvard Business Review, Nov 1996): it emphasises the difference between operational effectiveness and strategy, or the creation of "sustainable difference" in the way a company operates. Interesting stuff - particularly where he talks about the need to to organise activities so that they closely "fit" together. It is not a separate activity that creates competitive advantage, it is how well they fit together that creates the difference. He also explains how trade-offs are important in developing a business strategy - the companies that are willing to trade off one advantage to gain a marked advantage in another area are able to defend themselves better against competitors, and to sustain this difference over quite a long period - "strategy renders choices about what not to do as important as choices about what to do".
Thursday, March 09, 2006
Subscriptions: Apple and TiVo
Also, TiVo have announced the phasing out of a flat-fee lifetime service plan in favour of more flexible pricing options. The emphasis seems to be clearly on creating a strong revenue stream from a subscriptions based model.
Shipping CD's with internet deliveries
Now, of course there are ways around this issue - keeping everything online for instance, however if you are attempting to download to a remote device this might not be an option. So, a CD, a DVD, a Compact Flash, a USB key, or some sort of physical distribution mechanism will be required.
The question is then raised as to how you achieve this. Do you set up a completely brand new distribution mechanism to cope with the physical delivery, or what else can you do?
One approach that seems to make sense is to stay focused on the Internet delivery, giving all customers access: but having a complementary physical distribution mechanism, perhaps for an extra fee to cover distribution charges. Sun are doing this with their Java Runtime Environment. If you download it off the internet it's free, but if you want it on CD you will need to pay for it.
Tuesday, March 07, 2006
Red Hat revisited
The picture is an interesting one. Red Hat are quite a profitable company now with good cash resources, and are slowly working to a position of net earnings since their foundation. It's a good example of a subscription model working, particularly in a business where the 'product' itself is freely available open source software.
The 2005 financial report is here.
Embedded, Embedded Everywhere
"The European Union wants member states to back an industry-led $3.24 billion research program into the invisible embedded computer systems that control everyday household appliances, consumer gadgets and cars."
"A fifth of the value of each car produced in the EU is due to embedded electronics, a value that is expected to rise to about 40 percent by 2015, creating 600,000 new jobs in the EU automotive sector alone, according to Artemis."
Now, how about updating all those embedded systems easily?
Monday, March 06, 2006
Software as a utility
Of course when we think of utilities we think of commodity products: electricity, gas, oil etc. Software often has intrinsic value: you might expect to pay more for ERP software than, say, video game software. There is also the issue of how connected a user must be in order to use such a model.