So, I was perusing the Joel On Software archives last night, and came upon Strategy Letter V in which Joel expounds on the economics of software. In particular, he mentions that commodifying hardware is easier than commodifying software. This is because finding or building substitutes for software is hard.

Substitutes for any item need to have the same attributes and behavior. The new hard drive that I install in my computer might be slower or faster, larger or smaller, but it will definitely save files and be accessible to my operating system. There are two different types of attributes of any substitute. There are required attributes (can the hard drive save files?) and ancillary attributes (how much larger is the hard drive?). A potential substitute can have all the ancillary features in the world, but it isn’t a substitute until it has all the required features. The catch to building a substitute is knowing what are required and what are ancillary–spending too much time on ancillary can lead to the perfect being the enemy of the good, but spending too little means that you can’t compete on features (because, by definition, all your viable competitors will have all the required features). (For an interesting discussion of feature selection, check out this article.)

Software substitutes are difficult because people don’t like change (not in applications, not in URLs, not in business). And software is how the user interacts with the computer, so the user determines the primary attributes of any substitute. And those are different with every user, since every user uses their software in a different manner.

But, you can create substitutes for software, especially if

  1. The users are technically apt (because such users tend to resent learning new things less).
  2. You take care to mimic user interfaces as much as you can, to minimize the new things a user had to learn.
  3. It’s a well understood problem, which means the solutions are probably pretty well understood also (open standards can help with this as well)

Bug tracking software is an example of this. Now, I’m not talking about huge defect tracking systems like Rational’s ClearCase that can, if you believe the marketing, track a bug throughout the software life cycle, up into requirements and out into deployment. I’m talking about tools that allow small teams to write better code by making sure nothing slips between the cracks. I’ve worked with a number of these tools, including Joel’s own FogBUGZ, TestTrack, Mozilla’s Bugzilla and PHPBT. I have to say that I think the open source solutions (Bugzilla and PHPBT) are going to eat the commercial solutions’ lunch for small projects, because they are a cheaper substitute with all the required attributes (bug states, email changes, users, web access).

I used to like Bugzilla, but recently have become a fan of PHPBT because it’s even simpler to install. If you have local access to sendmail, a mysql database and a web server (all of which WestHost provides for $100/year or you can get on a $50 Redhat CD and install on a old Intel box). It tracks everything that you’d need to know. It ain’t elegant, but it works.

I think that in general, the web has helped to commodify software, just because it imposes a certain uniformity of user interface. Everyone expects to use forms, select boxes, and the back button. However, as eBay knows and Yahoo! Auctions found out, there are other factors that prevent substitution of web applications.


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