Software prices are anything but Boron

commentary In southern California, there's a huge hole in the ground full of Boron, a dull but useful substance essential for the manufacture of semiconductors and dozens of other industrial processes.Half the world's Boron comes from this ever-deepening hole and once excavated finds its way to Los Angeles' biggest port, which ships incredible quantities of the stuff around the world to be turned into all manner of objects.

commentary In southern California, there's a huge hole in the ground full of Boron, a dull but useful substance essential for the manufacture of semiconductors and dozens of other industrial processes.

Half the world's Boron comes from this ever-deepening hole and once excavated finds its way to Los Angeles' biggest port, which ships incredible quantities of the stuff around the world to be turned into all manner of objects.

Some of it eventually ends up in the PCs, alongside countless other substances. All were ripped from the earth, transported around the world, elaborately transformed into astonishing forms as a result of extraordinary intellectual effort. Eventually, Boron and its fellows are shipped somewhere like Malaysia, where a company like Dell turns it into a PC that sells for the startlingly low sum of AU$799.

Of course, to turn that AU$799 Dell into anything useful, you need software and the most common software is Microsoft's AU$400-odd Windows XP and AU$300-plus Office 2003.

Both of these software products are the result of very considerable effort. Yet when you think of the globe-spanning, earth-ripping, dirt-transforming tasks performed by the thousands who are surely involved in transforming dirt into the machines we use each day, it isn't hard to wonder why the efforts of a few hundred well-paid, well-fed knowledge workers working within the safe confines of an air-conditioned office add up to a product of about the same cost.

Things get even more interesting when you consider that all of the physical, boron-style effort is done on wafer-thin margins. Dell chief executive officer Kevin Rollins last week told a Sydney press conference that as far as he is concerned, Dell simply can't make PCs any cheaper and still deliver a useful device.

The corollary of his argument is that the price of software is too high. Microsoft as much as admits this with its dribble of announcements about cut-down versions of Windows XP. Other ISVs constantly make price cuts or rejig licence terms so that they can charge less but still create viable long-term cash flow. The open source movement's neat trick of conjuring quality software out of willing programmer's spare time is another powerful illustration of software's high prices.

Dell somewhat immodestly believes that its business practices cause a "Dell effect," whereby everything in its path is commoditised until its price tumbles. Yet even Dell has not been able to commoditise the software business, which is now the largest source of IT-related capital and operational expenditure for many businesses.

This must change. Software's turn under the commoditisation microscope is long overdue and before our industry can serve more people, more effectively, the software needs to change as profoundly as Boron does in its extraordinary journey from pit to PC.