Jeremy wrote a comment on my last post, about which I’m still not sure whether he was kidding or not. Essentially, he disputed my view that software was not high-tech. It inspired me to write this post, where I argue for and against my initial stance. I encourage people to criticise what I say, because essentially all my posts are meant as brainstorms with the collective readers of this blog, in order to hopefully make us both smarter.

Why is it important? If you consider the “height” of an innovation as equal to the degree that it remains competitive to other innovations, I would consider it fairly relevant. If you look at it from an investment-perspective, if the aim of investing is to maximise profit at a minimised risk, then the more sophisticated and hard-to-replicate the product/service you’re investing in is, the safer your investment and the higher the potential for profit.

That is not to say that there is always a correlation between the “height” of an innovation and profit. Between innovation-level and expense, yes, but profit-potential can derive from a number of sources, including time-to-market, user-base & network-effect, etc. And those things are certainly not inherent to high-tech.

Why software is not high-tech

A while ago, Jeremy wrote several posts criticising open-source, one in particular stating that open source constrains entrepreneurship. I think he’s right. If a standard becomes open that means that the barriers to competing become far lower, and the profit-potential falls starkly also.

The software-market has exploded because of a number of open standards, starting with the commoditisation of the IBM-computer, and freely accessible libraries of code and frameworks to build upon. This applies to the web as well. (Please note: I’m not a programmer, nor have I studied the craft, so corrections to my interpretation are welcomed.)

With the rise of software, came also a parallel rise of open-source software, which has a fairly low market-share in terms of operating-systems (if you exclude OS X), a somewhat larger one for tools like browsers and office-packages, and a huge market-share for server-based software, not to mention web-sites technologies.

What these open standards achieved is making the production to the technology more and more accessible to the general public, to the degree that anyone can open a “software-factory” in their garage or similar.

If you equate a craft or a technology to a mountain, then software would be a hill, and with the rise of easy-to-learn frameworks like Ruby-on-Rails, perhaps becoming a rock.

Why software is high-tech

We live in a technological world, there’s no denying that. Back when we read (and wrote) science-fiction, we imagined this world to come about by the shifting of resources by large organisations, which were optimally positioned, financially and human-wise, to do so.

The world today was not quite like we imagined it back then however. While our world is incredibly technological, exceeding most science-fiction writers’ expectations, much of what we are seeing today, at least in terms of software, is a collaborative effort, leading to high-tech products and services, made up of many small parts.

And that is what software is: a great brain, made up of many small parts. And a brain, by any account, is a high-tech product.

Conclusion

Now, as I said before, high-tech does not equal profit. It is incredibly difficult, time-consuming, expensive to create, and often not worth the effort for individuals that want to make a quick buck. Hence it is not surprising that much of it is left to governments and other large organisations.

An example. If someone were to come up to you and say: “I invented the world-wide-web, it’s filled with gazillions of bits of data, which is intermeshed, and constantly updated. How much would you pay for it?”

There is no answer to that question. Some things are simply not equatable in money. The infamous $23.4 million space-toilet is another perfect example for that, as is the space-pen, etc.

The great thing about software is that, while it can lead to incredibly complex “brains”, it is not high-tech in terms of production-need. If it were, and if consumers were forced to pay for it, it wouldn’t be where it was today.

Instead, most of it falls in the low- and medium-tech domain, some of it easy to sell, much of it not, but all of it contributing to a great value in our lives.

But it is still no flying car. And if you want to create high-tech, which I define as world-changing technology like the cure for aids or cancer, clean energy, or robot-servants, expect it to cost a lot, at least in terms of time and human resources, if not financially.

And software will certainly play a part in the creation of these innovations. But only a part, and the way I see it, a part that will become increasingly cheaper and easier to produce. But that same reasoning can be applied to a number of mass-produced technologies, e.g. silicon-based chips.

So, make money while you can. But remember to change the world also!

Vincent

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