Subject: Software vs Service (Was: What should Sun do?)
From: Laurent GUERBY <laurent@guerby.net>
Date: Fri, 04 Feb 2005 23:43:30 +0100

On Tue, 2005-02-01 at 21:22 +0100, Laurent GUERBY wrote:
> That's just wrong, it's pretty easy to measure private vs proprietary:
> you can get the number of IT employees working in companies that don't
> sell software (all do support and/or in house and won't be affected if
> say all proprietery software just disappear) vs number of IT employees
> in companies that sell software adjusted by the published ratios of
> licensing vs service revenues (most IT companies dutifully report
> those).

Answering myself, first taking IBM as a data point.
IBM 2004 revenues are spread between software (15.1), hardware (31.2)
and services (46.4) so of the software+service part, software is 25%
and service is 75% (growing faster than software):

http://www.ibm.com/investor/4q04/4q04earnings.phtml
<<
[...]
Revenues from Global Services in 2004 totaled $46.4 billion, an increase
of 9 percent (4 percent, adjusting for currency) compared with 2003.
Hardware revenues were $31.2 billion, an increase of 10 percent (7
percent, adjusting for currency). Software revenues totaled $15.1
billion, an increase of 5 percent (1 percent, adjusting for currency).
Global Financing revenues totaled $2.6 billion, a decrease of 8 percent
(12 percent, adjusting for currency). Revenues from the Enterprise
Investments/Other area increased 9 percent (5 percent, adjusting for
currency) to $1.2 billion.
[...]
>>

Also to be noted:
<<
IBM signed services contracts totaling $12.7 billion and ended the
quarter with an estimated services backlog, including Strategic
Outsourcing, Business Consulting Services, Integrated Technology
Services and Maintenance, of $111 billion.
>>

111 billions in service future revenue is quite a lot!
Software sales probably do not have that much future "mostly certain"
revenue.

Then Novell:
http://www.novell.com/news/press/archive/2004/11/pr04078.html

<<
(in thousands USD)
Net revenue                 2004     2003
New software licenses    238,419  265,256   
Maintenance and services 927,498  840,240
>>

So 20% software / 80% service in 2004, software down 10%, service up 10%
from 2003 to 2004.

And these are software companies, most in house development
happens within non software companies.

Economists still talking about software patents and innovation
incentives are really not looking at what matters for the software
industry at all. Talking about the software industry loosing
all jobs because no one gets paid for free software is just
well... misinformed or dishonest.

Laurent