Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Software Is the New Oil

avc.com

Post reply on HN
Print view View original

11–20 of 89 posts

Re: Software Is the New Oil

#11

Post by pjc50 »

kfk wrote: post #8

And yet when you look at it, the biggest opportunities to create immense value added are on the hardware side of things: self driving cars, pharma (aging, cancer, etc.), robotics, batteries, power generation, interstellar expeditions, bringing billions of people out of poverty, etc. I don't want to be dismissive, but the software industry might very well go through and M&A and commodification phase once it matures. I…

self driving cars, pharma (aging, cancer, etc.), robotics, ... , power generation, interstellar expeditions

All of those involve very large software elements, and benefit from software innovation.

It's quite plausible that the existing winners are at the top of their ramp, so buying in today at high p/e might not be a good bet. But all the unicorn investing is betting on new software companies coming along and reaching ascendency.

Re: Software Is the New Oil

#12

Post by jerf »

jofer wrote: post #3

If software is the new oil, be prepared for a wild ride. The oil industry is notorious for decade-scale cycles of over-hiring and then layoffs and under-hiring, rinse-lather-repeat. Regardless, it's a good analogy, but be careful how far you take it. There's a _very_ important difference between the energy and other major industries. It's a difference that the software industry shares, but in the opposite extreme: Th…

"If software is the new oil, be prepared for a wild ride. The oil industry is notorious for decade-scale cycles of over-hiring and then layoffs and under-hiring, rinse-lather-repeat."

We've already been through one. We may be on the high side of another right now. I think the mechanisms are sufficiently different from the oil world that comparisons aren't too helpful, though; the presence of some form of negative feedback in the system is often sufficient to produce oscillations. The negative feedbacks are quite different in character even if the results are the same at a sufficiently high level of abstraction.

(I'm not sure that we're in a "bubble" in the 1999 sense that people worry about, but still, if the economy ever becomes healthy again and interest rates go up, software will cease to be the only investment people can make that has any chance of paying of, which will mean that even without a "collapse" the investor money flows may dry up relative to today. However, I think the industry has a greater focus on real profits today, which will buffer the industry substantially vs. 1999. Yeah, we talk about the hyper-growth eyeball-selling companies, but we talk about they partially because they are the exception; there's a lot more "real value" companies out there right now.)

Re: Software Is the New Oil

#13

Post by ousta »

sharemywin wrote: post #4
ph0rque wrote: post #2

Amazon, the company that “will never make money” surprised Wall Street last week with strong profits and it seems to me that they are going to start producing cash like these other big tech companies now. I missed this... any good articles about it?

wonder when amazon shed's it e-commerce business to focus on it's real money maker cloud computing?

this is not amazon strategy to ever get rid of the ecommerce business.

Amazon strategy is to become a leader in many fields, they got lucky and envisionned the potential of cloud early, for commerce of goods it is a thousand year old industry with big competition from all other the world, their goal is to cut costs, not to care about short term returns and once other businness collapse due to prices cuts that they cant folllow, then amazon will be the only leader in commerce and will rule the price of pretty much everything that is traded in the world.

Re: Software Is the New Oil

#14

Post by fab1an »

I don't know nearly enough about macroeconomic trends or basics to have an informed opinion on this, but I do wonder how much of the software giant's cash-generating power is eventually still based on industries that 'extract stuff out of the planet'. Even if that dependency were indirect - say by the amount of oil/minerals/diamonds needed to produce a chip that your software needs to run on - such a dependency would still mean that software can never be as much of a 'primal' industry as oil is/was.

Re: Software Is the New Oil

#15

Post by roymurdock »

I think it makes more sense to say that data is the new oil, and software is the machinery used to extract, refine, store, and convert it into energy. AWS, Azure, etc. will be the Shell and BP of the data world. But not all data is created equal, and we still haven't gotten the refining process down.

Hopefully we'll be able to use digital oil to fuel more than just the great engine of personalized advertising, which seems to be where most of the revenue is coming from right now.

Re: Software Is the New Oil

#19

Post by jasode »

I'm not convinced by this blog post that "software" is the new oil.

To me, it's the top talent of "software PROGRAMMERS" that's the "oil".

Let's pretend that Google Inc opensourced their entire software stack. Now, anyone can just spend money on hardware and datacenters and "replicate" what Google does in a certain sense. But did you really duplicate their abilities? Would intelligent and visionary investors fund such copycat endeavors?

I say no because smart people would realize you didn't replicate Google Inc's "hiring pipeline" of the best minds from Stanford/MIT/etc. Yes, we may have gotten a snapshot of Google's source code but we didn't duplicate their ability to attract desirable workers who can build >.

Even Bill Gates had noticed this point: Google's ability to poach top talent from Microsoft was better than Microsoft's ability to attract Google defectors.

Same analysis can be done for Amazon inc. A person could take all their source code for ecommerce and warehouse logistics and I'm not confident he could outcompete Jeff Bezos. First, you must prove that you're hiring a better pool of candidates than Amazon.

Lastly, the "software" advantage leaks outside of the organization because others copy it (open source) or ex-employees with knowledge leave and reimplement it (legally) at their next gig. On the other hand, it's not as simple to make top compsci graduates switch their career aspirations from Google/Facebook/Apple in SV to SmallPotatoesInc in Alabama.

Re: Software Is the New Oil

#20

Post by pjc50 »

One of these is a capital-intensive industry that extracts finite resources from the particular areas of the earth that happen to have them. The resource is consumed on a continuous basis.

The other is entirely dependent on skilled labour, and once deployed continues to deliver value.

Software is much more like real estate: the first entrants erect a patent barrier around the best bits and use it to charge rent to everyone that clusters around the core. It's subject to gearing-driven bubbles.

Post reply on HN