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Software Is the New Oil

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Re: Software Is the New Oil

#81

Post by mrweasel »

sharemywin wrote: post #76
mrweasel wrote: post #71

Earlier quoted context omitted.

No, that's ad companies you're thinking of. Software companies make money by selling services or shipping a product.

Google's a software company last time I checked and most of their money is paid by the click. FYI, if you aren't paying for it your the product.

Google is an ad company. 91% of their revenue comes from selling ads. They just happen to be an ad company that started with a successful search engine.

All the amazing software Google develop is to support their ad business, more or less.

Re: Software Is the New Oil

#82

Post by prostoalex »

jofer wrote: post #74
prostoalex wrote: post #67

Earlier quoted context omitted.

Oil is high cap-ex, low op-ex, as labor costs are relatively cheap. Software is low cap-ex, but once you've created a prototype and need to hire people to build a business on top of it, op-ex becomes expensive.

Oil is low op-ex compared to its cap-ex. I don't have numbers to back it up, but I'd argue software companies' op-ex is still far cheaper than oil's. Oil production and infrastructure maintenance aren't cheap. It's not like we just turn on the taps after the wells are drilled. However, labor is cheap, even in the software industry.

> However, labor is cheap, even in the software industry.

I think by this point we're accustomed to dealing with large software players who have scaled their businesses to the point where labor cost is indeed marginal to overall profit picture.

Back in the days attempts to build a small-scale software company (local Web design firm) or even a medium-scale software business (seller of compilers, industry-specific tooling, shareware) basically broke down because of unfavorable economics.

So we're dealing with a bit of survivor bias here - smallish and medium software firms for whom labor was a major cost center are either out of business, commoditized or both. In energy business, while the large companies still enjoy large budgets and economies of scale, it's still quite possible to be a small to medium size player and enjoy a steady cashflow.

Re: Software Is the New Oil

#83

Post by crpatino »

beambot wrote: post #48

So when is "peak software"?

I don't know when, but it certainly seems to abide by the diminishing returns rule:

"Programming today is a race between software engineers striving to build bigger and better idiot-proof programs, and the Universe trying to produce bigger and better idiots. So far, the Universe is winning."

Re: Software Is the New Oil

#84

Post by gaius »

tempodox wrote: post #35

“ We are long software ” Of all the suit babble I ever heard, this must be the most incomprehensible. Juggling stock options apparently wreaks havoc on the speech center of your brain.

It's a sentiment , not a distance.

Re: Software Is the New Oil

#85

Post by ArkyBeagle »

silverbax88 wrote: post #65
jasode wrote: post #19

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 suc…

This is more accurate. Taking the Amazon example, there is literally zero financial reason that Wal-Mart could not compete with Amazon. None. Yet,so far, they have not even come close. The reality is execution, not deep pockets. And that execution comes from the talent powering the company, at least in the right positions.

WalMart has a pretty significant investment in technology. It's not the same technology Amazon uses. It's more classic logistics, POS and backroom stuff. I've seen their job ads. They execute. WalMart grew primarily through technology - to be sure your Dad's technology, but Mr. Sam had a comprehensive printout for the day on his desk every day.

WalMart is significantly bigger than Amazon. WM - 485.65B v Amazon @ 88.99B. Call it 6x.

I shop at WalMart, and I will quite frequently take their "in store pickup" option. I also have amazon Prime and the goods I pick for those are different, it seems.

Re: Software Is the New Oil

#87

Post by silverbax88 »

ArkyBeagle wrote: post #85
silverbax88 wrote: post #65

Earlier quoted context omitted.

This is more accurate. Taking the Amazon example, there is literally zero financial reason that Wal-Mart could not compete with Amazon. None. Yet,so far, they have not even come close. The reality is execution, not deep pockets. And that execution comes from the talent powering the company, at least in the right positions.

WalMart has a pretty significant investment in technology. It's not the same technology Amazon uses. It's more classic logistics, POS and backroom stuff. I've seen their job ads. They execute. WalMart grew primarily through technology - to be sure your Dad's technology, but Mr. Sam had a comprehensive printout for the day on his desk every day. WalMart is significantly bigger than Amazon. WM - 485.65B v Amazon @ 88.9…

They execute in a different space than Amazon. What I wrote was 'competing with Amazon', which they are absolutely not.

I'm talking strictly in the 'online retail' space, which I believe was pretty clear.

Re: Software Is the New Oil

#88

Post by ArkyBeagle »

silverbax88 wrote: post #87
ArkyBeagle wrote: post #85

Earlier quoted context omitted.

WalMart has a pretty significant investment in technology. It's not the same technology Amazon uses. It's more classic logistics, POS and backroom stuff. I've seen their job ads. They execute. WalMart grew primarily through technology - to be sure your Dad's technology, but Mr. Sam had a comprehensive printout for the day on his desk every day. WalMart is significantly bigger than Amazon. WM - 485.65B v Amazon @ 88.9…

They execute in a different space than Amazon. What I wrote was 'competing with Amazon', which they are absolutely not. I'm talking strictly in the 'online retail' space, which I believe was pretty clear.

But you can actually buy stuff on walmart.com . I think they do compete in that. And the sheer number of stores for in-store pickup is a pretty good option.

Re: Software Is the New Oil

#89

Post by mathgeek »

adventured wrote: post #60
mathgeek wrote: post #28

"Facebook could have $20bn of cash in the next year and could be producing $20bn of cash a year soon." Came here hoping to find a "Facebook could..." line when talking about revenue. Was not disappointed. :)

Why? They're tracking to a likely $18+ billion in sales in the next four quarters. That's obviously an extremely substantial business. By comparison SAP is Europe's largest tech company and does $21 billion in sales. Facebook will surpass them within eight quarters (at a mere ~14 years old as a company).

It's just the common line that you see when people talk about revenue possibilities and Facebook. There's a tendency to talk about Facebook's potential (rather than their current state) because they're a company with a lot of it.
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