Thursday, January 26, 2006

Software: service or product?

Is Software a "service" or a "product"? This question had a somewhat clear mainstream answer a few years ago, but with the Internet connection possibilities things are quickly changing. Somebody calls this Web 2.0.

Sometimes it's hard to tell what is the nature of Software and discussing this requires some degree of hair splitting.

A discussion on how to "label" software depends on the definition used. I'll start claiming the definitions I found in a mainstream dictionary that I'll use in this discussion:

Service: Work done by one person or group that benefits another.
Product: Something produced by human or mechanical effort or by a natural process. .

Based on these definitions a service is provided when somebody does something to benefit somebody else. On the other hand a product is something *produced* by a person, a machine or nature (and not the act of producing it).

The first question that pops to mind is: can a service being considered "something produced by human". In other words, is it possible to define as a product the concept of "work" in the service definition? The answer to this question is critical for this discussion.

Work is defined as "Physical or mental effort or activity directed toward the production or accomplishment of something". In light of this, I could substitute the word "work" with its definition and rephrase the definition of service as:

Service: Physical or mental effort or activity, done by one person or group, directed toward the production or accomplishment of something that benefits another.

At this point, it seems obvious that physical objects are not services (we knew that!). The action of creating the objects can be considered services, if these objects benefit somebody.

The problem of labeling Software is that Software itself is not an object. It is, per se, also not a "physical or mental effort or activity" (software can be THE RESULT of the "physical or mental effort or activity", but it is not THE "physical or mental effort or activity" itself, unless you consider a computer a “person or group”).

We discussed the definition of service and product, but what is the definition of software anyway? Obvious you say? Not really!

Software: “The programs, routines, and symbolic languages that control the functioning of the hardware and direct its operation.”.

Some may disagree with me but I don’t consider the “Floppy”, “CD”, “DVD” or the Paper Manual being part of the Software itself. That’s kind of the necessary transport media it comes in (like the cereal box for cereal), but it is not what I buy software for. Matter of fact I often purchase software that I download, and I still properly call that Software.

This is different than a book. When you buy a book you buy a product. It is a physical object. When you download an e-book you buy really just Software. So, is Software a product?

I’m going to split some more hair here, but it is a necessary pain for this discussion.

I would say that the strict “collection of routines and symbolic languages that control the functioning of the hardware and direct its operation” in the English “software” definition is a PRODUCT, because can be strictly described as “Something produced by human or mechanical effort or by a natural process”.

Both human produced and automatically generated Software are strictly products.

The interesting part is that what you buy when you buy Software is NOT just strictly and purely “Software”. You don’t buy the software product, you LICENSE the software product.
When I buy a screwdriver (product), I can sharpen it and make it into a knife if I like. It is perfectly ok. I have the right to do so because I OWN the screwdriver completely.
When I “buy software”, most often I cannot legally modify it in any way shape or form. Read the license.

What you pay for in a software product often (not always) is:

1) The right to use it.
2) The rights (full or partial) of what you produce or gain with it.
3) Updates and support.
4) Actual or potential access to services that you can access using the software.

So, my conclusion is:

Strictly “Software” IS a product indeed.
In practical terms what you buy is almost never a Product, but is the RIGHT to use the product and the actual or potential services that came along with it.

Given the continuous evolution of technology the software as a product has very little value in the medium and long term. It ages quickly.
What gives longevity and continuous real value to the software is the continuous work done by the makers or supporters that benefits the end users. In other terms, a service!

So, when you buy a piece of software, think about this: you are really most likely paying for a service, not a product! Check exactly what you are buying and make sure the price matches with your expectations.

When you produce software, think about this: customers most likely expect to get a service too, not just the right to use YOUR product. Be prepared to offer a great service and charge what you need to charge for it.

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