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Vol 3, No 8 Announcements Just Released! The Softletter SaaS (Software as a Service) Handbook is now available! Packed with vital information you need to know about the SaaS tsunami. Just released! The latest edition of The Softletter Financial Handbook. Over 360 pages of strategic data for your software company. Now Open! www.SoftwareSuccess, the Softletter blog, is now open. Visit here. In This Issue's Softletter
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The Softletter/TechSmith User Experience Survey What is Your Perspective on User Experience Research? Participate in the survey online here User experience and voice of the customer issues are becoming of increasing importance to software companies. Together, Softletter and TechSmith want to know how these issues will impact your development, product management, and requirements management processes. This survey consists of 12 brief questions about user experience practices in the software industry and should take about 10 minutes to complete. The purpose of this survey is to find out how familiar people are with different user experience practices, who is using them, how, and which practices are used most often. Why should I participate? All survey respondents will receive a free summary of the results in the October 15th issue of Softletter. Also, TechSmith will use the results to tailor their User Experience solutions to better meet your needs. As an added bonus, all participants can enter to win free TechSmith software! Participate today here
The Micro-ISV Father Discusses the Kids, Part II of II (Eric Sink will be speaking at "The Business of Software Conference," San Jose, CA, October 29/30th
Eric Sink is the founder of SourceGear, publisher of source control system Vault, one of the industry's most popular alternatives to Microsoft's SourceSafe product. In 2002, Inc magazine honored the company as one of the 500 fastest growing privately held firms in the US. Eric is also the father of Open Source AbiWord, a product which generated much buzz in the industry but no cash. The effort served as yet another example that if you want to make the big money, building the hot products of the 80s (word processors, spreadsheets, presentation products and databases) in the late 90s and today is probably not the way to go. (We must admit we laughed when we looked up the Wikipedia entry on AbiWord and read about the whining that went on over the first versions lack of tables; readers of In Search of Stupidity: Over 20 Years of High Tech Marketing Disasters, which discusses the damage the lack of this feature did to WordStar, will appreciate why we found this funny.) Eric also worked on Spyglass, and led the development team that produced the browser that later grew up to be Internet Explorer. Eric's other main claim to fame is that he coined the term "Micro-ISV," a phrase which is increasingly being used to describe entrepreneurs who want to enter the software market with new ideas and products. He's recently had his first book published, Eric Sink on the Business of Software (Apress). We've read it, it's an excellent book, and we strongly recommend you buy a copy. We caught up with him to discuss the Micro-ISV concept and to get his take on industry trends and developments. In "Business" you make the observation that good sales people are motivated strictly by money, while a development group may have very different goals and aspirations. How are you planning to manage the culture change in the company? Well, first by acknowledging that there will be a culture change. We're putting an education process into place, one that explains the value of a sales force, what they do, and how they approach their jobs. Also, I believe it's important to reassure the developers that "your job will not change." What about VC investment? How do you feel about looking for outside funding? In your book, you mention that when you were at AbiWord you signed a contract with a "weasel" who promised to put you in touch with investors but didn't deliver and charged you $40,000 to cancel the contract. Despite that gruesome experience, I've reopened my mind on the topic of VC investment. We're not that far along the path where we're searching for an investor, but we're open to the concept and the right opportunity. Let's talk about the impact of some major developments in the industry on your company and the Micro-ISV concept. For instance, Open Source. SourceGear competes directly with some competitors in this area: Subversion, for example, is very well known and in wide use. Yes, we recommend Subversion to companies who don't want to pay for SourceGear. Open Source is a competitor, it has an impact on the market, but we're going to survive. Apache has not eliminated IIS. Open Office has not eliminated Microsoft Office. Adobe seems to be doing quite well despite the GIMP. Open Source products can never match the promotional budgets of "proprietary products," can never escape the issue that's there's no vendor to complain to and rely on for help. Yes, a vendor can disappear. And so can communities; take a look at all those abandoned Open Source projects on SourceForge. What about a potential Micro-ISV looking to start out? Should they consider releasing products under the Open Source model? I wouldn't recommend it. By nature, you're limiting yourself to a low margin business. Now, if you're going to consider the Open Source route, there are models that I think are better than others. For instance, the SleepyCat approach. Since many companies don't want to incorporate Open Source in their products, SleepyCat will sell you a proprietary license along with releasing an Open Source version of the product. But overall, this is a tough model to make money on. What about services? Open Source advocates believe that services are where you make money on Open Source and I can tell that services are a high margin business, at least according to our surveys. I'm going to argue that sometimes services are high margin and sometimes they're not. Larger software companies and IBM Global services can charge big customization and training fees. But a micro-ISV can't normally do this; typically they've captured a low-end customer and those big service margins just aren't there. What about Apple? I really would like to recommend Apple. My wife is a Mac user and it's a beautiful and elegant system. But despite all the excitement about Ipods and Itunes and I-everything, it's a small market. And it's hard to see any prospects of it growing larger. A tough call. But that brings me to Vista. Vista at this point reminds me of Liquid Robot Guy in Terminator II, slowly freezing in place. The burden of all that compatibility is just slowing down each release to the point where you have to speculate that this may be the last release of Windows. How long did it take to go from Windows 2000 to XP? Seven years? Let's be very, very generous and assume it only takes eight years to the next release. That's 2015. It's hard to imagine Windows still being so dominant by then. " When I think about my next startup or two, I see SaaS as very interesting. One thing you should remember is that you can't take the infrastructure costs lightly. Any Micro-ISV should be thinking about whether they're fully prepared to provide 24/7/365 access with zero downtime."
As for Vista, the way they're going with the APIs, if you're a C# user, you like the product. The UI looks gorgeous and it's better. But where is the payoff for the customer? I'm not sure there's enough value here. If Microsoft wants to remain relevant over the long haul, Windows 2015 needs to be meaty. Users will want more than another face lift for Media Player. If Windows releases are going to start happening nearly a decade apart, users will be expecting things like speech recognition that
works as well as it does on Star Trek."
End of Part II Manage Your SoftGram Subscription
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Upcoming Events Softletter's Marketing and Selling SaaS (Software as a Service) Seminar, 2007 Softletter Subscribers Save $200! All attendees receive three valuable bonuses October 3/4 Sofltetter's Marketing and Selling Software as a Service Seminar 2007 is the only event dedicated exclusively to helping SaaS firms and companies considering SaaS learn how to execute and transition to the SaaS business model. Read the seminar agenda and register today! Software Business Conference 2007 October 2/3 The annual conference focuses on current strategic business, financial and technology issues and growth opportunities facing top executives of software companies. It is a two-day conference serving owners, chief executives, presidents, vice presidents and division or department directors of leading and fast-growing software companies located throughout North America who are conducting business domestically and worldwide.
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