The document discusses several topics related to software business models and pricing: 1. It notes similarities between customizable sushi menus and component-based software that allows customers to choose modules. 2. It identifies high quality components, a la carte pricing, and product design as key success factors for sushi restaurants and software companies. 3. It discusses how component-based software can lower barriers to entry for new companies but be seen as a threat by larger established firms.

1. Software Business

2. Software and Sushi Software and Sushi are two of my favourite things. I like the customizability of sushi meals. There’s always a sushi meal that fits with my appetite. I also like the inexpensiveness of sushi. Or actually the inexpensive price per item. Three Euros for a Temaki, two for an Uramaki, etc. Low price per item means low pain in the buying process. Moreover I like the zenlike design of sushi sets. Like with the sushi, some software editors offer component-based software, where clients choose from a “menu” the modules they need. Sushi restaurants & software companies success factors: 1. High quality components 2. “A la carte” pricing 3. Product design Posted on Oct, 20 2008 Tags: software, sushi, price, purchase, success 1

3. Software Dis-Integration Componentware means software designed to work as components for larger applications. Like in the PC, that is built from keyboard, monitor, mouse, etc. In componentware, because the interfaces between modules are standardized, it is possible to mix software from different providers. Componentware is changing the dynamics of the business of software. Some software companies see it as an opportunity; SAP, for example, plans to split its monolithic solution into components that will facilitate the integration of third party components. Other software companies see componentware as a threat, as it could make the entrance barrier lower and the life easier for newcomers. Posted on Sep, 8 2008 Tags: software, components, standardization, business 2

4. Right Before It Things to consider before launching a new software company. 1. build a niche website - get credibility 2. ask your family doctor (or a friend, non programmer) for opinions - find out what you’re missing 3. buy your competitors' products – turn shortcomings into advantages 4. test your prototype with representative users - build not what you think people might want, build what they need. Posted on Aug, 6 2008 Tags: software, new, company, competitors, users, niche 3

5. Software Version Control In software engineering, version control tracks the changes made to the software. Version control tells Who, What and When any modification was made to the software. Alas, it doesn't say much on Why it was made. Did the modification come from a client request? Or was it made because it was easy to implement and inexpensive? Any inexpensive but unrequested product feature generates expenses for promoting, selling and supporting the software. Posted on Jul, 28 2008 Tags: software, expenses, version, product, feature 4

6. Positioning As persons, our "Positioning" is the place in the mind of our friends and parents. We are all defined by the perceptions the others have of us. The same happens with products. An example of product positioning is: "Software3.0 is [the] [most] advanced and easy to use Optimization Tool [for desktop applications]." Product Positioning statements use the definite article [the] to put the product in a given, unique place in mind of the market. The superlative feature [most] places the product at the top of your category. Last, the statement defines the target market segment [for desktop applications]. Example of a clear positioning statement: "EDEM is [the] world's [first] general-purpose CAE tool [for the simulation of particles]”. Posted on Jul, 24 2008 Tags: position, market, segment, meaning, language 5

7. In the Interim I’ve just learned that Engineous, a competitor of mine, was acquired by Dassault Systemes. Last year Engineous tied a partnership with IBM, and its acquisition by Dassault Systemes (an IBM company) was in the air. A colleague of mine in UK writes: "In the interim we should be ok, Abaqus hasn't bore fruit after being acquired by Dassault Systemes". Savvy, in the interim. Posted on Jun, 17 2008 Tags: competition, software, dassault, engineous, software 6

8. Profitable Niches Roland Thomas (Moldflow CEO) told me: “the more the Computer Aided Engineering market consolidation leads to standardized software, the more opportunities will come for profitable niches to be exploited”. E-Xstream makes a software that calculates the behaviour of composite materials, like plastics reinforced with glass fibers. The opportunity for E-Xstream came from the multi-phase nature of composite materials. The software Digimat they produce calculates the physical properties of the material to be used for further calculations. This is an example of what Roland predicted. Posted on Jun, 4 2008 Tags: software, standardization, niche, market, opportunity 7

9. Feature that Matters Most Companies like Google and Netscape knows what it takes to run a successful business. It is the business model, and not the product that determines success or failure of software companies. That’s what many start-ups have unhappily discovered for themselves. I’ve still much to learn, yet something have learned on what start-ups should better do: – remain a “product company” long enough to build a customer base, before offering customization and services – run the business independently from distribution channel – avoid appointing the chief engineer as business manager. Posted on Jan, 29 2008 Tags: competition, business, model, start-ups, marketing 8

10. Who Moved My Chair? The motivational book Who Moved My Cheese? features two mice and two humans living in a maze -a representation of our ever changing environment, and looking for cheese -representative of happiness. One day they are faced with change: someone moved their cheese. The humans, having counted on the cheese supply to be constant, rant at the unfairness of the fate and head home hungry; while the mice, having noticed the cheese supply dwindling and prepared for the change, rush in search of a new cheese. No rush, friends. Our cheese won't move. It has already moved, and keeps on moving. Our cheese is moving to Chindia. On Linkedin, thousands of engineers are applying for your job (and mine). Grid Computing and Open source might be the new supply of cheese. At least for a while. It is not the strongest of the species that survives, but the most responsive to change. Posted on May, 13 2007 Tags: engineers, book, success, change, cheese 9

11. The Art of Pricing Sun-microsystems markets the new 8-processors server T2000, that can blow out all the old 4-processors. One T2000 can replace two old servers. Theoretically server sales should be halved. Theoretically. Jonathan Schwartz (Sun CEO) actually says the sales revenues from the new T2000 are growing fast, pointing out an interesting phenomenon: “if you double the performance of a machine, customers don't buy half as many, they tend to double their order”. Hardware comes together with the software. Software can solve large problems on many processors at the same time. Each processor has to run one software licence. Still, a double number of processor at the same price, comes with a double software price. An effect of the above price policy is that massive parallel processing or distributed computing will remain rare, unless software companies will change their price policy. Posted on Dec, 3 2006 Tags: sales, price, policy, license, performance, software 10