[Disclosure: I'm the author] No argument that up-front, perpetually licensed software is currently a huge, profitable business. Windows and Office alone, as acknowledged, generate essentially $44B by themselves. There are also profitable businesses that pursue the traditional perpetual license model - Palantir being perhaps the most notable example (although from conversations with employees there, they are increasingly being pushed towards alternative models).

But the point of the Software Paradox is not that companies are not currently and cannot in future make money from software, and that there are no exceptions to the rule, it's that the trajectory broadly is not promising. Looking across a variety of software categories, from mobile to operating systems to infrastructure to tooling to consumer, the trendline is downward in terms of their up-front realizable revenue potential.

None of which should be taken to mean that software is going away. If anything it's becoming more important, hence the use of paradox. But developers and companies seeking to monetize software should at least be aware of the market context which is that it's becoming more difficult to make money from it the way that it was possible to even a few years ago. Even the lock-in mechanism, which is correctly cited as a method proven to monetize customers efficiently, is more easily replicated in services businesses (e.g. cloud) than it is in traditional on premise software, where open source has become both an expectation and a means of combatting lock-in.

If one looks at all of the available evidence and decides to proceed with a traditional software licensing approach in spite of the observable challenges, it is certainly not impossible for them to a) generate revenue and b) be profitable. But the degree of difficulty attached to this model has gone up considerably, and looks to only be getting worse. And this isn't just an academic theory, it's something I hear almost daily in conversations with vendors.

Appreciate your clarification. I agree that the overall trajectory is not promising in the mass market. What are your thoughts on the pay more for quality or security market for software/systems? Have those analyzing the data made this distinction to see how much the trend affects that market segment? Many that I know of still use the old model's of licensing or expensive appliances although the startups are doing things with new models. I think, if that niche had same effect, it would reinforce your claim even more. If it wasn't as impacted, it would give the best spot to invest in and market apps with profitable, licensing models. What I often called the Toyota Strategy.

"Even the lock-in mechanism, which is correctly cited as a method proven to monetize customers efficiently, is more easily replicated in services businesses (e.g. cloud) than it is in traditional on premise software, where open source has become both an expectation and a means of combatting lock-in."

I'm actually starting to agree with this more and more as I look into how they design it. Facebook is the perfect example: containing people's whole life with no easy way to move it. The cloud vendors usually allow unlimited incoming data and charge for outgoing. Tricks like that combined with low, entry barrier might make for nice lock-in over long term.

"But the degree of difficulty attached to this model has gone up considerably, and looks to only be getting worse. And this isn't just an academic theory, it's something I hear almost daily in conversations with vendors."

Oh, like I said, I buy that. Title just read like another piece on how that type of software was done altogether. The claims about the trend in the book and your comment are right on. I guess you could say that's what I really was griping about. ;)

For existing software providers, the book recommends a transition to an recurring revenue model ala SaaS. Short term business incentives and technical limitations in an existing code base, may make this a tuff sell to existing software providers.

But the long term advantages are well argued in the book (less support costs, higher long term revenue per customer) and perhaps worth the costs of transition.

The recurring revenue model is particularly advantages for products with a strong lock-in.

You have a good point and it complements my comment rather than contradicting it. I should've been clear that, by SaaS, I meant the cloud-hosted-monthly type we see the most. Traditional software that's paid for monthly is still licensed, commercial software. You are totally right that this can be financially advantageous to the company: it's the reason many of us avoided certain software in the past. ;)

Now, with the entrenched doing it, it's looking to be difficult to avoid for buyers. One negative side-effect is that it might be more difficult for newcomers to start without a lot of capital. Snagging a few customers for $1,000-3,000 each can cover costs more quickly that slowly building up subscriptions of $10-50 a month. On the other hand, it might make it easier to sell.

Still not sure on that part. Wonder if anyone has published a detailed analysis of costs and benefits of that for a startup doing a native application on subscription. Probably just missed it.

The recurring model is proven, though, for established software companies to iterate more on and squeeze more profit from their offering. The shift of the profitable firms toward that market argues heavily for it.

I'm not sure those big vendors will stay around, to me Oracle looks particularly vulnerable. They may have a lot of "locked in" customers now but all they can hope for from that strategy is a long and eventually terminal decline.

The problems facing the biggest vendors have to do with lack of innovation and adaption. For example, Oracle could've been investing in and acquiring all kinds of clever DB technology to integrate within their own stacks. They did little in that space. Now those companies are eating their potential market-share.

First Oracle acquired Peoplesoft. They could've changed their name or Orasoft. Then they acquired Siebel, and should've changed their name or Orabel.

Jokes aside, Oracle has been on a huge acquisition spree for many years. Fusion (based on the Weblogic acqusition) was supposed to integrate all the other acquisitions, as well as partner products. It was over-hyped, and took years to fully materialize. And then Oracle missed the cloud boat, and has been playing catch-up ever since.

Probably most importantly is their sales strategy. As a potential Oracle customer all you had to do was mention Microsoft, and Oracle products would get heavily discounted. And then the customer would get stung for extortionate consulting fees and license renewal costs.

They used to be a quality name in the industry, but have slowly and very steadily eroded that reputation.

I was talking about the companies marketing document, key-value, cloud, etc. databases. New & improved, at least different, technologies that were coming from many different areas and getting lots of users. They might have acquired many top-name companies in those bunch and Oracle's NoSQL products have millions of paying users. I haven't followed Oracle acquisitions closely so I had to take a guess: Oracle's culture would make them primarily acquire things similar to them: RDBMS's, ERP, etc. Then, companies doing things in different ways would keep scooping up customers that might have bought Oracle.

Was this the case or was I way off? You seem to know more about their acquisitions.

Hmm - so what would be a title that would not be a 'half-truth'?

There is only so much space in the title - you cannot load it with all available information. The article itself goes in much detail about what you describe shortly here - and what is the most surprising in it is the decline - it seems to me thus as a very good choice for the title of that article?

The title reads like it's gone or going away. It's not. The book itself supports the opposite: a much smaller marketshare with revenue coming from prior and new models with a concentration toward subscription.

I'm not the kind of persion with artistic or brevity skills you want making a title. An honest example anyway: "The Rise and Decline of Traditional, Software Companies." Or something similar that indicates the game is changing, up-front proprietary is on decline, and importantly commercial software is still a multibillion dollar business with successful startups appearing each year.

Steam engines for commercial travel had a rise and fall. Software market is just adjusting with cetain models taking a financial hit.