Since I’m a product manager by day, I was intrigued by Forrester’s Mike Gualtieri’s tweet:

“Software has become very bloated #btf09 because vendors love to add features and users hate to lose features”

Without doubt, this is conventional wisdom about the software industry. The first part of this statement is often considered the culprit much more than the latter. And to be honest, the latter doesn’t happen unless there is a better replacement for the feature that customers are using.

If we focus on the first part of the statement, it’s all too easy to point the accusing finger at vendors alone. However, features aren’t added to software products because a developer thinks it’ll be “cool” or because it’s a “challenging technical problem to solve”. Nor are features added because the vendor needs something new for the next product release; vendors typically have a backlog of features at every release.

Features are added in response to a widely held business issue that a customer is trying to remedy. Widely held means there’s an emphasis on adding features that 80% of customers will find helpful. That isn’t to say that niche features aren’t added for important customers; they are, but these features are not a top priority for releases.

All of the above is equally true for commercial open source, open core and traditional software. Gone are the days of open source vendor employed developers working on features that “scratch an itch”. Open source vendors have quickly added professional product management roles to ensure that the product contains features that customers will find valuable enough to purchase the product and ongoing upgrades.

Regardless of how open source and open core vendors position their subscription offerings, they’re selling products and related support and maintenance. This is no different from traditional software vendors do. As such, the customer driven requirement for new features which solve existing and new customer issues remains critical.

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PS: I should state: “The postings on this site are my own and don’t necessarily represent IBM’s positions, strategies or opinions.”

Forrester’s John Rymer tweeted:

“Spoke with a client who believes the 4 top vendors are stifling innovation by crushing small vendors — with no hope in sight. Yikes”.

Working at one of the “4 top vendors”, it’s natural for me to disagree.

First of all, innovation occurs across the software industry, from “elder companies” (thanks Cote) to startups.

Second, most startups nowadays use some variation of the open source business model.  With the code out in the open, it’s difficult to argue that elder companies can “crush small vendors”.  Sure, an elder company could try to fork the code as Oracle did with RHEL.  But this strategy hasn’t proved successful to date.  An elder company can acquire the small vendor as Oracle has done with Sun/MySQL.  However, as we’ve seen with MySQL, if the community doesn’t approve of the acquirer’s actions, the community will fork the code and innovation will continue.  The open source business model severely limits the degree to which an acquirer can “crush” the acquiree, either deliberately or by happenstance.

Third, let’s look at elder company acquisitions of small vendors. Most deals have been after the small vendor has established itself in terms of usage and/or a revenue stream.  This too argues against elder companies crushing smaller vendors.  More often than naught, a sale to an elder company is part of a smaller vendor’s (or more likely their VC’s) long term plan.

I will concede that elder companies don’t stand idly by as competitors, big or small, introduce innovation into the market.  Elder companies respond with their own attempts to leapfrog the existing innovative product or offering. But hey, that’s competition for you.

What do you think?

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Here’s a BusinessWeek article about how “Microsoft is Fighting Back (Finally)”.  The most interesting part is about Microsoft’s new “Windows Anytime Upgrade” strategy. Here are some details:

“Because of the smaller size of Windows 7, three versions of the program will come loaded even on lower-end machines. If a consumer on a cheaper PC running the “Standard” version tries to use a high-definition monitor or run more than three software programs at once, he’ll discover that neither is possible. Then he’ll be prompted to upgrade to the pricier “Home Premium” or “Ultimate” version.

Microsoft says the process will be simple. Customers enter their credit-card information, then a 25-character code, make a few keystrokes, then reboot. Brooks says pricing hasn’t been determined, but upgrading “will cost less than a night out for four at a pizza restaurant.””

After reading this, I instantly thought about Cote excellent post titled “The Return of Paying for Software” from last summer.  Cote wrote:

“When it comes to making money with software, the iPhone App Store is the glossiest example of trend I feel creeping up on us: people paying for software.

Yes, people have been paying for software forever, but the expectations for most consumer software of late has been that it’s free.

The change here is an environment where people will spend $0.99 to $20 for a piece of software. I often comment that this user-mentality – spending small amounts of cash on software – exists in the OS X world, but it’s been lacking from others.”

While I initially balked at the thought of a popup window with: “Hey, it looks like you can afford a high definition monitor, so why not get the most out of it with Windows 7 Home Premium, for an low price of $19.99?”, I’m willing to give this idea the benefit of the doubt.  This recent NYT article (via Cote – that man is Gold!) explains the success of an iPod/iPhone game called iShoot, and is a reason behind my openness to the Windows Anytime Upgrade strategy:

“In January, he released a free version of the game with fewer features, hoping to spark sales of the paid version. It worked: iShoot Lite has been downloaded more than 2 million times, and many people have upgraded to the paid version, which now costs $2.99. On its peak day — Jan. 11 — iShoot sold nearly 17,000 copies, which meant a $35,000 day’s take for Mr. Nicholas.”

Consumers are getting accustomed to acquiring software for instantaneous incremental gratification.  The consumer gets some value off the bat, but is faced with a purchase decision to get incremental value.  When the consumer decides to follow through with the transaction, the gratification is instantaneous, not tomorrow in the mail or through a 4hr download.  With the Windows Anytime Upgrade strategy, consumers would get some value off the bat.  Upon hitting a feature/function wall, a purchase decision would be presented.  And if the consumer chooses to transact with Microsoft, it seems that the incremental value would be provided on the spot, without having to download or acquire and install another DVD’s worth of an OS.

Seems like an interesting strategy that’s much closer aligned to how consumers pay for software today.  Maybe an unexpected outcome of Apple’s App Store strategy is to educate consumers ahead of Microsoft’s Anytime Upgrade strategy.

I was thinking about the discussion that Rich Sharples (Red Hat), Shaun Connolly (SpringSource), Larry Cable (Oracle/BEA), Jerry Waldorf (Sun), Adam Gross (Salesforce.com) and I had at the SD West Application Server panel a week ago.  The session was billed as healthy debate about the Application Server market and our respective company’s role in the future of the market. I’d conversed with a few of these guys in the past and was looking forward to some level of one-upsmanship at the expense of the product/company we were each representing.  However, the discussion turned out to be much more civilized, with little discussion about kinks in the amour of our respective products.  Rather, we spoke about growing the ecosystem in which we all compete.  While this sits well with my Canadian sensibility, I wasn’t sure what to make of it.

Then I saw this tweet from Redmonk’s James Governor:

monkchips its great to see respectful, insightful coverage of Microsoft Silverlight news from #MIX09 from the Adobe team – @mdowney, @sjespers etc.

And then a light bulb went off.

It’s very easy to put down competitor X’s product when your statement is not going to be saved for prosperity on the Internet, and when the people working on product X are faceless.  However, in today’s interconnected market, many of us have interacted online with peers at competitors long before in-person meetings.  As this has happened, I sense we, as vendors in the software market, have raised the bar of mutual respect and learning.  This is goodness for those of us who compete.  It’s also goodness for customers because we vendors are spending our time and resources learning from our competitors in order to deliver a better product experience.  This is significantly more rewarding than spending time and resources putting down other products.  Customers choose products on the strength of the value they deliver, not on the lack of value delivered by competing products.

Dr. Phil over and out.