It seems like everywhere you turn these days, there is more bad news about the global economy. Bankruptcies, layoffs, and bailouts continue to mount. We are hearing the words "recession" and "depression" more frequently than ever before in our lifetimes. The truth is, the world is in the midst of a severe economic crisis, and the end isn't yet in sight. But if you do software, web development, or media, you have good reason to be hopeful about the future. This is the time to hunker down and continue growing your skills and experience, because what you do will be more important than ever.
Unlike some of the other industries hard-hit by the crisis, we've already been through this before. The information technology sector alone lost 700,000 jobs when the Internet bubble burst in 2000. These were permanent job losses, never to be recovered, and even the most pessimistic estimates predict only a fraction of the losses this time around. Our industry is paranoid by nature, and we've watched a number of failed business models go by the wayside since 2000, while new models have emerged. There will still be some painful lessons to learn before the worst is over, but our industry as a whole is much stronger than we were 8 years ago.
The real reason for hope, however, is the nature of software itself. Software is one of the most scalable forms of human value creation ever achieved. When you write a piece of software, your skill and effort can benefit thousands, millions, or hundreds of millions of people with almost no incremental cost to you. Web developers understand this intuitively. Facebook expends almost zero incremental effort to propagate new features to 100 million users. The same holds true of traditional skrinkwrap companies. Adobe Software, who spend heavily on research and development, still enjoy 80% profit margins when expenses are accounted for. Microsoft, Google, and Apple enjoy similarly high margins, and it's not because we are geniuses -- it is because software is such a superbly scalable way to provide value.
This wasn't always a matter of common agreement. There was a serious debate in the 1990s about the value of software. Some companies felt that software was simply free "bait" that could be used to sell hardware. Those companies are now defunct. And most importantly, companies like Google and Apple (and of course, Microsoft) who focused on software, have done well. This isn't to say that hardware is defunct -- back in 2004, Steve Jobs famously explained that the iPod is simply "software in a box". The complete experience requires you to purchase the proprietary hardware and pairs you with the iTunes software service, but these are essentially mechanisms to prevent piracy. The real competitive advantage is in the software. The mobile handset companies who have done very well, all realize that their hardware is a mechanism used to sell their software experiences, and not vice-versa. Likewise, Google's crown jewel, the pagerank software, is kept secret from most Google employees and is hidden behind a service, yet can benefit millions of users by being made available over the web.
You already know that creating software is hard. Skilled user experience professionals, developers, and testers don't grow on trees. Traditional software (whether in a file, in a box, or in a cloud) will be more important than ever, and the massive changes taking place in the world economy will present some new opportunities for skilled people to contribute to the common good. Software will be needed to help fill the holes left by the decline of mainstream news organizations. Software will be needed as spending on energy independence increases drastically. Software to make healthcare more efficient, software to help citizens connect more effectively with government and social programs, software to educate, inform, and inspire. Yes, software will be more important than ever. There may be lean times ahead for all of us, but there is no better time to start getting better at what you do.
So, what are the trends in software that get you excited about the future? Where do you think the biggest challenges and opportunities lie? We'd love to hear from you. And don't forget to subscribe to the RSS feed or follow mixonline on Twitter to get future updates
Unlike some of the other industries hard-hit by the crisis, we've already been through this before. The information technology sector alone lost 700,000 jobs when the Internet bubble burst in 2000. These were permanent job losses, never to be recovered, and even the most pessimistic estimates predict only a fraction of the losses this time around. Our industry is paranoid by nature, and we've watched a number of failed business models go by the wayside since 2000, while new models have emerged. There will still be some painful lessons to learn before the worst is over, but our industry as a whole is much stronger than we were 8 years ago.
The real reason for hope, however, is the nature of software itself. Software is one of the most scalable forms of human value creation ever achieved. When you write a piece of software, your skill and effort can benefit thousands, millions, or hundreds of millions of people with almost no incremental cost to you. Web developers understand this intuitively. Facebook expends almost zero incremental effort to propagate new features to 100 million users. The same holds true of traditional skrinkwrap companies. Adobe Software, who spend heavily on research and development, still enjoy 80% profit margins when expenses are accounted for. Microsoft, Google, and Apple enjoy similarly high margins, and it's not because we are geniuses -- it is because software is such a superbly scalable way to provide value.
This wasn't always a matter of common agreement. There was a serious debate in the 1990s about the value of software. Some companies felt that software was simply free "bait" that could be used to sell hardware. Those companies are now defunct. And most importantly, companies like Google and Apple (and of course, Microsoft) who focused on software, have done well. This isn't to say that hardware is defunct -- back in 2004, Steve Jobs famously explained that the iPod is simply "software in a box". The complete experience requires you to purchase the proprietary hardware and pairs you with the iTunes software service, but these are essentially mechanisms to prevent piracy. The real competitive advantage is in the software. The mobile handset companies who have done very well, all realize that their hardware is a mechanism used to sell their software experiences, and not vice-versa. Likewise, Google's crown jewel, the pagerank software, is kept secret from most Google employees and is hidden behind a service, yet can benefit millions of users by being made available over the web.
You already know that creating software is hard. Skilled user experience professionals, developers, and testers don't grow on trees. Traditional software (whether in a file, in a box, or in a cloud) will be more important than ever, and the massive changes taking place in the world economy will present some new opportunities for skilled people to contribute to the common good. Software will be needed to help fill the holes left by the decline of mainstream news organizations. Software will be needed as spending on energy independence increases drastically. Software to make healthcare more efficient, software to help citizens connect more effectively with government and social programs, software to educate, inform, and inspire. Yes, software will be more important than ever. There may be lean times ahead for all of us, but there is no better time to start getting better at what you do.
So, what are the trends in software that get you excited about the future? Where do you think the biggest challenges and opportunities lie? We'd love to hear from you. And don't forget to subscribe to the RSS feed or follow mixonline on Twitter to get future updates