This is a 1989 perspective! Before 1991/92 everyone thought that you had to have hardware to sell a product. Apple was making great margins on its Macintosh product line. In 1991(?) in Harvard Business Review there was a milestone article titled "The Computerless Computer Company" suggesting how Microsoft was going to change the world by being a 'software only' company, without a hardware product of its own. The last 10 years has shown that hardware is for the most part a commodity and the major 'value add' or competitive advantage is through software. Look at hardware margins... DVD players are selling this week for $20. eMachines will sell you a computer for less than $300. On the other hand application software is holding its price or increasing as new features are added. What hardware product can you imagine that could sell without the vast majority of the development budget going toward software development instead of hardware development? Its 2003 and not 1990! I would rather discuss trading than software however!!!!
I could write a 10 page paper on this, but I read something here on ET along the lines of "do not feed the trolls" -Fast
If you are position trading software or hardware companies then these facts are directly related to trading. ......
Well, now is much different time from late 80's and early 90's. What do you think hardware vendors are going to do as it comes to extending their market shares? You are absolutely right. The profit margins are already tiny. All vendors bet on nowadays are time and volume (incidentally quite similar to some traders approaches). All these convinces me a upcoming change of trends. Tremendous fresh new profits will be introduced to hardware vendors by eating software vendors' lunch. Piracy, copyright, upgrade, much headache, most problems will be gone when the important logic and engineering are hard wired on chips and circuit boards. Upgrade also will be much predictable, profitable, and hassle-free. All in all, when hardware gets much cheaper and powerful, it will come after software's territory. Let's see.
Cheaper hardware will only create demand for more software. Not less. You cannot suggest a single advance in hardware technology over the past 20 years that did not create an increased demand in software. Modems? More basic communication software. Faster CPUs? More graphics software. Better network hardware? Internet protocols. More memory? Faster and more attractive applications. If hardware was a safe bet you would not have Dell, Gateway, and Apple opening stores to push consumer electronics such as large screen TVs. They know their only competitive advantage today is not in hardware but in their distribution channels and customer base. Hardware will continue to get cheaper. But cheaper hardware will only generate demand for more software. ramora