Advice for struggling PC software vendors

Advice for struggling PC software vendors

Summary: If your business is struggling, more and more of the same ol', same ol' isn't going to suddenly give you a lift. You need to make a few changes — and, fortunately, they're not all that hard or costly — or the vicious cycle will continue.

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Despite all the headlines where teenage app makers sell their barely pubescent products for millions, being an independent software vendor — especially in the old-school PC world — is not an easy gig.

I'm talking especially about the makers of specialty PC software, particularly those who make what we used to call "utilities" or "power tools." In a world where PC sales drop precipitously, and our operating system makers seem to be dumbing everything down to an Angry Birds least common denominator, makers of deep, rich power tools are having some dog days.

These are the makers of the incredibly feature-rich text editor, developers of the screen capture program with 400 feature, authors of the thumbnail viewer that's really a full digital asset manager, creators of the file copy program that has more features buried in its graphical UI than the Linux shell has in all its arcane commands, and coders of the development environment that can do the craziest sorts of cross-platform live debugging.

Many of these vendors have been in business for a decade or more. They've been making money on one main piece of software and have continued to refine it, improve it, add customer-requested features, and chugged along, providing a unique value to a select set of customers with unique needs.

You get the idea. Power tool software for power users.

These companies don't sell their products to everyone. Here's an analogy. Most homeowners own a power drill. It might not get used much, but once in a while you might break it out. But few of us homeowners own a full drill press. After all, that's more like something you'd see in a shop rather than the typical home.

But some homeowners have home shops, and use drill presses, milling machines, and all sorts of customized tools. There's a market for these power tools. It's not just the same market that sells Hello Kitty-powered screwdrivers.

Over the past month or so, I've been working on a big image workflow project, and so I've been looking at and discarding an entire array of power tool software. I go through these phases when I put on my power user hat, and try to optimize a solution for some sort of unique work problem or process.

During these phases, I often sift through a couple of dozen tools, looking at the problem from a wide variety of angles, and get to see some very slick, deep, special-purpose software.

The PC software industry also goes through its phases. It's had its ups and downs for decades now. There are times when there seems to be no end of opportunity and times (like now) when things seem particularly bleak and sales are down.

When the market is down, being a software company owner can be a rough, rough gig. There are often not quite enough new customers to support the workload, so something has to give. Often, it's the support staff that's the first to go, followed by good nights' sleep, and perspective.

If you're an owner/developer, you're struggling with trying to balance development time with support time with the time you devote to any other forms of income that are being used to prop up the business and pay bills.

If you're an owner, but reliant on a developer either as a partner or a contractor, things get even more worrisome, because somehow you have to keep the developer in pizza and caffeine, and keep him or her happy enough (and paid enough) so you can continue to keep your product evolving and on the market.

I know. I've been there. I ran a company that made and sold specialty software (in my case, plugins and embedded database technology) for over a decade, before I finally sold off my flagship product. I then wrote The Flexible Enterprise (free PDF download), about how to transform a business model and create an agile business.

Before then, I was Symantec's director of product marketing. I've been on the board of the Software Entrepreneur's Forum (now SDForum), and in my subsequent decade as a publisher of online technology magazines, worked with hundreds of other software vendors. I even wrote 40 rather silly iPhone apps and made a few bucks off that experience.

In other words: been there, done that. I think I'm reasonably qualified to give advice to the struggling PC software vendors out there. Now, I'm fully aware your situation is different: you have a plan, you know what you're doing, you don't have time, you know you should, but... look, I've given all those excuses. Like I said, been there, done that.

But the bottom line is simple. If your business is struggling, more and more of the same ol', same ol' isn't going to suddenly give you a lift. You need to make a few changes — and, fortunately, they're not all that hard or costly — or the vicious cycle will continue.

Roll up your sleeves. Let's get started...

Topics: Tech Industry, Software Development

About

David Gewirtz, Distinguished Lecturer at CBS Interactive, is an author, U.S. policy advisor, and computer scientist. He is featured in the History Channel special The President's Book of Secrets and is a member of the National Press Club.

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42 comments
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  • How do you get around

    How do you get around the fact the OS folks (Apple, MS, Google) are doing everything possible to keep users from installing your software unless you give them 1/3 of the sale and only if it gains their blessing?
    NoAxToGrind
    • Have I got an OS for you

      I know you're not interested, but Linux still lets you install whatever software you want. And you don't have to compile your own kernel, unless you want to.
      John L. Ries
      • The problem on Linux

        Is three fold.

        Linux users by and large don't like to "buy" applications.

        They love to hack and post "keys" to software on P2P sites.

        It's such a tiny percentage of Desktops there just is very little market. Especially when you are targeting a small market to begin with.
        NoAxToGrind
        • Responses

          1. From the user's point of view, this is irrelevant. From the developer's point of view, I assure you that my employer sells enough proprietary software for Linux to keep me gainfully employed. It must be understood, though, that if you don't produce software that's significantly better than the available free stuff, you're not going to make anything (which is how the free software should work).

          2. I suspect this is a small minority. There are certainly plenty of Windows users who develop viruses and trojan horses for it, but that doesn't seem to deter many people from using it.

          3. It's a small market with a lot of software available for it (a small fraction translates to millions of actual users). You won't get many of the name brands you're used to, but I haven't been a regular Windows user, except on the job, since 1995 and don't miss it.
          John L. Ries
        • Linux is for freetards

          Indeed. In the late 1990s, FrameMaker users were looking forward to the next whole-number release. But before it arrived, Adobe announced that Linux would be left out because Linux users, by and large, didn't feel they should have to pay for software.
          paul613
          • Maybe...

            Framemaker wasn't worth what its publisher was charging for it. There's a lot of free software available for Linux, with which proprietary developers have to compete if they want to make money.

            As noted in my response to NAG, this is a problem for developers, not users.
            John L. Ries
          • I agree...

            It's a problem for developers which explains why so few are willing to code for Linux on a "for profit" basis.
            NoAxToGrind
          • FrameMaker's demand was inelastic

            The only software that can edit a FrameMaker file is FrameMaker. And large documentation shops had adopted FrameMaker as their tech publishing platform. As Adobe saw it, a tech writer who needed to produce a document in FrameMaker had no choice but to use FrameMaker--on one platform or another. By cutting off FrameMaker for Linux, Adobe probably figured it would drive sales of FrameMaker for Windows, Mac, or commercial Unix. In any case, Adobe has always priced FrameMaker high, apparently figuring that employers would foot the bill and that even freelancers would use the software to make money, so cost was secondary. I use it noncommercially, and haven't upgraded my FrameMaker 7.1 license in more than 10 years.
            paul613
        • Re: Linux users by and large don't like to "buy" applications.

          Simple answer, which I thought would have been covered in Economics 101, sometime in the first week or so:

          Sell the scarcity, nor the abundance. Digital bits are abundant, and effectively available at a price that is zero as near as dammit. Software is just digital bits, so selling software was always going to be a dead end--why do you think Microsoft and Adobe are now trying to push their customers onto a subscription model?

          What IS scarce is your brain: after all, it took brain power to come up with that software. So use the software as a promotional tool to advertise the power of your brain. THAT'S what you can sell.
          ldo17
        • No, I Don't Like To Buy

          software when there is perfectly fine software available for free that is easier to use than a $200+ piece of commercial software where the vendor has never been able to make a decision on how it should look, feel, or act.

          No, I don't post nor use illegal keys to software or operating systems.
          rich3page
    • You give 1/3 because ...

      ... you get easy access to a potential market of hundreds of millions of users. Robber baronry ... perhaps but there is no free lunch.
      EnticingHavoc
      • It's not robber barony at all

        It's actually quite generous. Or do you think You get full retail for your product at Best Buy? Or do you think that the blog author was advocating robber barony when he suggested you contract with another developer and only pay THEM 30% and keep 70% for yourself?

        It's called business. Apple is offering you a service that is a tremendous help to your attempt to sell software and are charging you a 30% royalty to sell your software for you.

        That 30% is actually quite reasonable.
        baggins_z
        • Just not true

          Ask the thousands of developers that tossed their hat in the ring and got lost in the swamp of useless apps and didn't make a thing. There is NO REASON a user should not be able to come to my web site and DL and install something they want. Well, other than the big three don't like it and can't get their greedy paws on the money.
          NoAxToGrind
      • Useless exposure...

        As the article pointed out, most PC apps / utilities are targeting a very small and selective audience. Having exposure to millions of people looking for "angry birds" is a waste of time and effort.
        NoAxToGrind
    • You jump for joy because it's better than the 30-10-10

      discount you used to have to offer to get your stuff in a brick and mortar store.
      baggins_z
      • I haven't seen anyone...

        Push applications in brick and mortar for years. They sell from their own web site making it cheaper for the end user.
        NoAxToGrind
  • Depends on your perspective

    There are two parts to that question: the 30% cut, and the "gains their blessing". Unless you distribute to customers directly, all distribution channels take their cut. Back in the days of software stores like Egghead, software vendors would only get about 30-40% of the selling price, because both the retailer and distributor needed to get their cut -- and that was back when we had cost of goods for the printing and packaging.

    Even now, selling through Amazon or other resellers involves someone getting a piece of the pie. In the app store model, the Apple/MS/Google folks are providing a distribution mechanism, a collections mechanism, and something of a marketing resource. Since COGS is pretty much zero, their piece of the pie isn't generally a bad thing.

    What IS a bad thing is the risk of whether -- after you do all the work -- that you'll be able to sell your software. That's a big part of why I only did silly iPhone products and not the server monitor program I'd originally set out to do. The "vetting" process is worrisome, and -- speaking personally -- I don't think I'd be willing to devote a ton of time making a product without know I could sell it to customers one way or another.
    David Gewirtz
    • Walled gardens are not free markets

      Under the traditional model, one has a choice of software distributors to patronize, and one can shop for the best deals (and one can often buy from the developer directly). Under the iOS-style walled garden approach there is a single distributor that all users and developers have to work through (ie. a monopoly) who can set whatever conditions they choose without having to worry about being undercut by a competitor. One can, of course, jailbreak his iOS device, but that's considered to be illegal in the U.S., and Apple reserves the right to brick such devices (maybe you thought that iPad was yours?).
      John L. Ries
      • Walled gardens are precisely free

        markets. No one is forcing you to write iOS software. No one is forcing you to JUST write for iOS. Apple is offering a service. You are free to use it or not. People buying phones are free to use it or not, by deciding to buy an iPhone or an Android device.

        Your ability to choose to NOT offer your product for iOS, but instead for Android is the PERFECT example of a free market at work.

        What is NOT a free market is somebody like you demanding the state FORCE Apple to conduct it's business in a way that satisfies YOU personally.
        baggins_z
        • Bull...

          If all three big players are in collusion to CONTROL all coders then there is no free market.
          NoAxToGrind