≡ Menu

The Era of the (Software) Hit

Chris Anderson’s The Rise and Fall of the Hit is an interesting read, both from the historical point of view he brings to the music industry and for the “Long Tail” analysis he applies to today’s music industry.  His observation that, despite the decline of hits-driven marketing vehicles like FM Radio, more people than ever are listening to music, is especially hard hitting, given that we hear so much wailing from the entertainment industry.

If media markets have shifted from mass, hit-driven markets, to multitudes of micro-markets, what then of PC software?  At Microsoft, in the mid-1990’s, the comparison to hit-driven business like music and film was one that was made frequently.  No doubt the internet has revolutionized the distribution of software. You just have to visit any Fry’s, Best Buy, or CompUSA and marvel at how paltry the selection of software is compared to a decade ago.  But is the absence of software on those shelves a reflection of a shift in the industry, a declining industry, or something else?

There used to be an organization called the Software Publishers Association.  It has morphed into something called the Software and Information Industry Association, which focuses on the broader information industry as a whole.  The SIIA Software Division publishes a series of annual outlooks for their members.  The 2005 Executive Outlook began with this statement:

Spending levels, the movement to “software as a service” licensing models, outsourcing and talent needs were among the many topics Spencer Stuart and SIIA explored in the survey.

There is a clear trend toward monthly licensing models, despite IT industry opposition, which could explain the absence of product on the shelves at retail.  Moreover, if you check out the 2006 Codie Award Winners, there is clearly a movement away from packaged software to software delivered via the web. 

What of the PC software industry itself?  Interestingly, the SIIA Industry Statistics page, which provides an overview of “Useful Data” about the industry covers only server software, security software, Linux and open source software, and music downloads.  There is a complete absence of traditional desktop software. Moreover, none of the Software Division resource pages have been updated since late 2005. Is this just bias? Or is it reflective of a dying industry?

My view?  Well, pick up a copy of PC Magazine.  That once mighty tome of the PC industry is a thin little book barely bigger than the weekly TV listings.  The era of enthusiast driven PC products might finally be over.  In fact, Windows 95 was really the last big hit that the software industry had.  It was the last time we saw the phenomenon of people lining up at midnight to buy the latest packaged PC software, and the last time there was a massive spike in the interests of the buying public in PCs. 

The future may still be different from today.  Microsoft is seeking to recreate the Windows 95 phenomenen 12 years later with Windows Vista in 2007.  They’re promising a launch on a never-before-seen scale.  Will it be a shot in the arm for the industry, or is it too late? Was PC software a hit driven industry, now fragmented by new business models, or are we seeing the death-rattle of the entire industry as open source and server based applications render PC based software irrelevant.

I don’t have the answers I’m afraid.

{ 0 comments… add one }

Leave a Comment