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Archive for January 20th, 2014

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Certain activities are fundamental to the human endeavor.

The list:
Acquisition of food, shelter and water
Mate attraction and selection
Procreation
Acquisition or forage of information regarding the first three
Acquisition of goods and services that may make it more efficient to get the first three
Exchange of above three

Only software that deals directly with these activities flourishes into profitable, long term businesses.

I define software here as computer programs running on severs and personal computers and devices.

The race to the bottom in the pricing of information and software and hardware that runs that software ensures that only software businesses that scale beyond all competition can last. Scale means massive and efficient data centers, massive support functions and a steady stream of people talent to keep it all together. And the only activities in the human world that scale enough are those things that are fundamental activities to us all.

Sure there’s a place for boutique and specialist software but typically firms like that are swallowed by the more fundamental firms who bake the function directly into their ecosystem and then they give it away. And this is also why the boutique struggles long term. Those fundamental software builders are always driving the cost down. So even if a boutique is doing ok now it is not sustainable if it is at all relevant. It will be swallowed.

Open source software only reinforces this. In fact it takes this idea to the extreme. The really successful open source projects are always fundamental software (os, browser, web server, data processing) and further drive the price of software to zero.

Scale is the only way to survive in software.

This goes for websites, phone apps, etc. All the sites and apps that focus on niche interests that don’t deal with the fundamental activities above directly either get assimilated into larger apps and sites with broad function or they whiter and die unable to be sustained by a developer.

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