Subject: Re: Economics of software distribution
From: "Russell Nelson" <nelson@CRYNWR.COM>
Date: Wed, 17 Mar 1993 11:12:23 EST

On Wed, 17 Mar 93 01:36:39 EST, "Christopher Maeda" <cmaeda@ERNST.MACH.CS.CMU.EDU> wrote:
>    Date: Wed, 17 Mar 93 10:17:36 JST
>    From: nick@NSIS.CL.NEC.CO.JP (Gavin Thomas Nicol)
>    Actually, I think the main reasons are pretty much as you say, though
>    the startup costs must also play a part.
>    However, I feel that slowly, but surely, the mass-market will be
>    catered to. Look at Linux and 386bsd. They are already being sold on
>    CDROM. Sooner or later, someone will make a complete version,
>    shrink-wrapped, with manuals, and I suspect that of the price is
>    right, and they do their marketing well, they will make money.
> This is probably true, but they will only be making money because they
> didn't have to fund the software development.

Here are some of the ways software development might be funded (not
mutually exclusive):

 1) Through the enjoyment of creation.
 2) By the admiration of your peers for a job well done.
 3) Through the desire to share a product asset with others.
 4) By investing part of your time for the creation of a software business.
 5) By borrowing money to invest more of your time ...
 6) By reinvesting the profits from an existing business.

Obviously the latter three concern us more.  I see little real
difference between items 4 and 5 if you are in a position where more
effort gets you more money.  In either case, you are expecting a
return on your investment.  That means that you plan to be in a
situation similar to 6, where the business must be profitable.

It seems to be that in a free market with perfect information (that
is to say, one that doesn't exist :), another business could enter
your market with the intention of making zero profit, and undercut
you.  What protects you against that is the fact that perfect
information doesn't exist, and information is not free.

-russ <> What canst *thou* say?
Crynwr Software           Crynwr Software sells packet driver support.
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