Software, Growth, and the Future of the U.S Economy Report of a Symposium (2006) / Chapter Skim
Currently Skimming:
The Economics of Software--William J. Raduchel
The Economics of Software--William J. Raduchel
Pages 36-46
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From page 36... ...
Positing that software is the world's largest single class of either assets or liabilities, and the largest single class of corporate expenses, he argued that "the care and feeding of the systems [that] software runs...dominates the cost of everything." In addition, software is, as 36
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From page 37... ...
`I don't know what happened.' 2Throughout the 1970s and 1980s, Americans and American businesses regularly invested in ever more powerful and cheaper computers, software, and communications equipment. They assumed that advances in information technology -- by making more information available faster and cheaper-would yield higher productivity and lead to better business decisions.
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From page 38... ...
Experts on computer components and peripherals speaking at "Deconstructing the Computer" predicted across-the-board price declines of 20 to 50 percent for at least 5 more years and, in most cases, for 10 to 20 years.3 During this long period marked by cost reductions, new business practices will become cost effective and capable of implementation through ever more sophisticated software. As a result, stated Dr.
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From page 39... ...
Raduchel predicted, the next 10 years would be wrenching for all consumer entertainment, and piracy would be a recurrent issue. A major factor driving piracy, he noted is that "the entertainment industry makes money by not delivering content in the way consumers want." Music piracy began because consumers, as has been clear for 15 years, want music organized with a mix of tracks onto a single play-list, but that doesn't suit any of the music industry's other business models.
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From page 40... ...
A piece of packaged software is but one component of the stack, he said, and no one uses it on its own: "The thing you actually use is the entire stack." Finally, the software stack is defined not only by its specifications, but also by the embedded errors that even the best software contains, as well as by undocumented features. To build a viable browser, a developer would have to match Internet Explorer, as the saying goes, "bug for bug": Unless every error in Internet Explorer were repeated exactly, the new browser could not be sold, Dr.
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From page 41... ...
Raduchel described the overall process as "very messy." Packaged software, whose cost can be fairly accurately tracked, has never represented more than 5 percent of the total project cost; "the other 95 percent we don't track at all." Accounting rules that, for the most part, require charging custom and own-account software to general and administrative (G&A) expense on an ongoing basis add to the difficulty of measurement.
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From page 42... ...
Their inability to measure elements of such complexity causes economists numerous problems. A good deal of software is accounted for as a period expense; packaged software is put on the balance sheet and amortized.
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From page 43... ...
9The Sarbanes-Oxley Act of 2002 was passed to restore the public's confidence in corporate governance by, among other measures, making chief executives of publicly traded companies personally validate financial statements and other information. Maintaining such proper "internal controls," however, requires secure computer systems for maintaining data.
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From page 44... ...
Those long active in the software industry rarely see anything patented that had not been invented 30 years ago; many patents are granted because the prior art is not readily available. Slashdot.org, an online forum popular in the programming community, has a weekly contest for the most egregious patent.
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From page 45... ...
Consequently, giving it away is actually a good strategy. However, some forces in the United States, primarily the vendors of proprietary software, want to shut open-source software down, while others, such as IBM have played an important role in developing Linux and other opensource platforms.10 In the course of a discussion with Federal Communications Commission Chairman Michael Powell, Dr.
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From page 46... ...
46 SOFTWARE, GROWTH, AND THE FUTURE OF THE U.S. ECONOMY not." But he described the day's goal for the STEP Board, including Dr.
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