Hi
Intangible investment behaves differently
41–50 of 93 posts
Re: Intangible investment behaves differently
#42When I first learned that software had a price during my very young years, I was in quite disbelief. Isn’t it just bunch of invisible bits? Can’t it be copied with almost zero cost? Why someone would pay for it anyway when kids like me can make it? It’s hard to charge money for things people can’t physically posses. In early years, almost all software companies employed a trick to design big attractive boxes with bit…
Elaborate on the boxes? This isn't the old trope by Bob Wallace about 'I sell manuals'?
Games companies often had what they called "feelies": my copy of Ultima 7 came with a cloth map of Britannia and a small black "moonstone".
You didn't have this for business software, but you did need something to keep the disks in. I think the largest such thing I saw was 100+ floppy disks; here's Raymond Chen on floppy installs of Windows: https://blogs.msdn.microsoft.com/oldnewthing/20050819-10/?p=...
Re: Intangible investment behaves differently
#43When I first learned that software had a price during my very young years, I was in quite disbelief. Isn’t it just bunch of invisible bits? Can’t it be copied with almost zero cost? Why someone would pay for it anyway when kids like me can make it? It’s hard to charge money for things people can’t physically posses. In early years, almost all software companies employed a trick to design big attractive boxes with bit…
The box designs were driven more by attracting attention from retail customers in physical stores than by perception of value. Just like cereal boxes.
The user manuals were absolutely necessary for complex software. Most users had only a single low resolution monitor back then so online documentation had poor UX.
Re: Intangible investment behaves differently
#441) The first two paragraphs about 'assumptions' are essentially false. There are no assumptions in supply and demand, it's not a dynamic equilibrium, it's a snapshot. Yes - over time supplies tend to change due to demand, of course, but that's 'long run' stuff ... not in that chart. The author is kind of misinterpreting the chart. 2) It's not 'sunk cost' that's the issue, this is about 'fixed' vs. 'unit' cost. Softwa…
I think the idea is that the fixed cost of failed software is (largely) sunk.
You can sell a big industrial motor or fork lift that might be part of the fixed costs of running a small factory.
Re: Intangible investment behaves differently
#45Plenty of people are paying attention,and Gates contradicts his own title with this sentence: "The portion of the world's economy that doesn't fit the old model just keeps getting larger." How can it get larger if no one is paying attention?
You don't have to understand how an economy works to participate in it. It helps, for sure, but it isn't required. Trial and error goes a long way. A lot of companies will go out of business because they are doing something that doesn't work, but some will chance upon something that works.
Re: Intangible investment behaves differently
#46TL;DR: Actually, read this longer thing:
https://smile.amazon.com/Capitalism-without-Capital-Intangib...
Re: Intangible investment behaves differently
#47Earlier quoted context omitted.
Elaborate on the boxes? This isn't the old trope by Bob Wallace about 'I sell manuals'?
Games companies often had what they called "feelies": my copy of Ultima 7 came with a cloth map of Britannia and a small black "moonstone". You didn't have this for business software, but you did need something to keep the disks in. I think the largest such thing I saw was 100+ floppy disks; here's Raymond Chen on floppy installs of Windows: https://blogs.msdn.microsoft.com/oldnewthing/20050819-10/?p=...
Well all games used to come as a CD in a box, simply because it wasn't viable to download them from the internet. I still remember the amazing box for GTA:SA that came with a large map and a little booklet to introduce you to the game.
Re: Intangible investment behaves differently
#48Earlier quoted context omitted.
Elaborate on the boxes? This isn't the old trope by Bob Wallace about 'I sell manuals'?
https://i.ebayimg.com/images/g/azAAAOSwD99av12v/s-l1600.jpg There's a shrink-wrapped cardboard package that contains Windows 98. It's the size of a cereal box, and at least as colorful. Today, I'd be intensely annoyed if I had to wait for and pay for a large box to ship - I'd much prefer an instant download, but the box was much more tangible than an email with a download link and license key.
"Well all games used to come as a CD in a box, simply because it wasn't viable to download them from the internet."
Was this not the reason software was distributed in CDs? I can understand MSFT/Apple using that packaging for customer experience.
Re: Intangible investment behaves differently
#49Earlier quoted context omitted.
Elaborate on the boxes? This isn't the old trope by Bob Wallace about 'I sell manuals'?
https://i.ebayimg.com/images/g/azAAAOSwD99av12v/s-l1600.jpg There's a shrink-wrapped cardboard package that contains Windows 98. It's the size of a cereal box, and at least as colorful. Today, I'd be intensely annoyed if I had to wait for and pay for a large box to ship - I'd much prefer an instant download, but the box was much more tangible than an email with a download link and license key.
At the time of Windows 98 you probably wouldn't have wanted to download the damn thing.
If you are of a younger generation, you may not believe it, but many of us in those days made do with something called dial-up connections to the internet.
I well remember downloading the StarOffice - precursor to LibreOffice - suite in the days before it was taken over by Sun, meaning 1999 at the latest. Took a little over five hours, and was done at night when rates were lower. I actually stayed up, nursing the process along. And afterwards guarded the downloaded installation file, almost with my life, although it took up an inordinate amount of precious storage space. It was 50MB and a bit, you see.
Re: Intangible investment behaves differently
#501) The first two paragraphs about 'assumptions' are essentially false. There are no assumptions in supply and demand, it's not a dynamic equilibrium, it's a snapshot. Yes - over time supplies tend to change due to demand, of course, but that's 'long run' stuff ... not in that chart. The author is kind of misinterpreting the chart. 2) It's not 'sunk cost' that's the issue, this is about 'fixed' vs. 'unit' cost. Softwa…
Yes and there's more that is wrong in the article:
"as demand for a product goes up, supply increases, and price goes down"
No, when demand goes up, the price will go up as well unless supply increases by the same amount. The price will only go down when supply increases and demand doesn't keep up with it.
"the tools many countries use to measure intangible assets are behind the times, so they’re getting an incomplete picture of the economy. The U.S. didn’t include software in GDP calculations until 1999. Even today, GDP doesn’t count investment in things like market research, branding, and training—intangible assets that companies are spending huge amounts of money on."
First of all let's skip the part about what the US did until 1999 because we're living in 2018 at the moment. And then the fact that market research, branding etc. is not included in GDP calculation has little to do with the digital age. There has always been market research and branding, not just now. One might argue that it should be included but that is really a separate topic.
"It took time for the investment world to embrace companies built on intangible assets. In the early days of Microsoft, I felt like I was explaining something completely foreign to people. Our business plan involved a different way of looking at assets than investors were used to. They couldn’t imagine what returns we would generate over the long term."
No doubt things were like that in the 80's. But just take a look at the most valuable Dow Jones funds now and it's clear that intangible assets are valuated well nowadays.