What I Talk About When I Talk About Software Products

Source: Alamy

Writer’s note: This post is part one of a series of three about software products; it was originally published on my LinkedIn profile on 29-Oct-2020

In the software business, we use the term ‘Product’ regularly. We have a product strategy and a product portfolio, we hire Product Managers and Product Designers, we talk about selling and buying products etc.. so it’s worthwhile to put some thought into what we consider to be a software product and what do we mean when we talk in these terms.

A cardboard box full of bits

I’m no economist or historian, but growing up in the pinnacle of the personal computer revolution in the mid-eighties, I can safely assume that the term Software Product has been popularized during that period, and for good reasons. Historically, the term Product has been strongly associated with a ‘manufactured good’ — be it a drill, a refrigerator, a shirt or a book — it’s a physical thing, packaged in a box and bought ‘off-the-shelf’; it has a price and a pretty clear definition of value. That TV set which you bought at the mall for $300 is clearly defined by its specification. And i’m not suggesting this is the only definition for a Product but it’s clearly the canonical one.

When personal computers became the boon for households and small businesses, they drove with them an entire industry of software products; those software products where often termed ‘killer applications’, as they provided the use cases that gave the justification to buy the hardware which was really what the big players were trying to sell. This is the era where companies like Lotus, Borland, Microsoft, Adobe, Ashton-Tate, Apple, Oracle and others were competing on developing software that allowed us — consumers and business users alike — to drive up our productivity, creativity and efficiency with utilities like a spreadsheet, a word processor, a publishing software, a drawing program etc

If, like me, you are pass 40, then I would bet you can still recall how these products were delivered to individuals and organizations, they were delivered …. well, like a product. You bought them in a big package, on a shelf in a store. It was provided in floppy-disks (and later on CDs) accompanied with thick books (typically a ‘tutorial book’ and a much thicker ‘reference guide’ — both of which I used to fondly read). Consequently, they followed a traditional product development process — software products were specified, from their features up to the dimension and design of the package in which they were boxed; shipped to stored; delivered and updated with new versions typically on an annual basis.

These days are over now, in fact they are over for many many years, to the point where some readers of this post may not have even seen a “Software Product” the way I describe it. And what made them go away is simply put ‘The Internet’. In his ’96 documentary “Triumph of the Nerds” which explores the PC revolution, Robert X Cringley interviews Larry Ellison, CEO of Oracle and then a strong proponent of “the network computer” (god — anyone remembers that?), which said the following thing:

“me going down to the store and buying Windows 95, I’ve got to get into my car drive down to a store buy a cardboard box full of bits you know encoded on a piece of plastic CDROM and you bring it home and read a manual install this thing — you must be kidding you know, put the stuff on the net — it’s bits, don’t put bits in cardboard, cardboard in trucks, trucks to stores, me go to the store, you know, pick the stuff out, it’s insane.”.

The Medium Is The Message

And we did — we put the stuff on the net; but revolutions are slow and just putting stuff on the net, doesn’t change things fundamentally … at first. It’s very much like the music industry: first there were CDs and then they were encoded into .mp3 and then .mp3 files were uploaded to “online music stores”; but you were still downloading “an album”, and this entailed how you bought it and how you consumed it; and that’s because the first wave of any digital revolution always follows the same pattern … you turn physical into digital; you encode it into bits and put it on a server … but you don’t change the medium; so yes — it provides convenience, as you don’t need to drive to the store; you can access the manual as a .PDF instead of packing your house with more to-be-door-stoppers, it might also means you will be getting more periodical updates; but it doesn’t fundamentally change the product — which is a CD, packed in a box, specified, priced and consumed as a unit and delivered with thick how-to-use books. True — there’s no shelf, box, or book — but there’s a clearly the concept of a shelf, a box and a book. There’s still the abstract notion of a product.

In his 1964 seminal book, “Understanding Media: The Extensions of Man”, communication theorist Marshall McLuhan coined the phrase “The medium is the message” signifying the importance of the characteristics of the delivery mechanism over the content which is actually consumed; I would argue then, that the first wave of digitization does little to change the medium (in our example — the product), but that eventually it does transform into a new medium which consequently creates new ways of consumptions.

It took another decade or so, but that evolution into “the second wave” did eventually happen in the world of software and it did with the advent of “cloud computing”, which is dated to 2006 with the introduction of Amazon Web Services. And what cloud computing did, is that it moved the computing power away from the consumer’s desk in a way which made little sense to continue “ship him a product”. In other words, the idea that a collection of bits needs to be delivered in one unit started to diverge further and further from what the new technical capabilities allowed, to the point where the new medium called for a new kind of message.

Again, it’s worth revisiting a similar trend in the domain of music; at some point, the “iTunes store” model gave away to streaming. Streaming was the new medium, enabled by new technical capabilities, that regarded music as an experience that can be delivered continuously, rather than as a discrete set of songs packaged in an album. I would argue that this is not merely a “technical change” but that it radically changed both the way we consume music (playlists, sharing, recommendations etc.) as well as how we pay for music.

Similarly, once cloud computing allowed software to detach itself from the notion of a “packaged product” it allowed a new kind of business model to emerge, which is Software as a Service (SaaS). Originally marketed by pioneers like saleforce, around key advantages of connivence, such as the ability of sales people to access data from the field, and the promise of frequent update; today SaaS is becoming more and more the standard way to consume software, and it does change the consumption model in radical ways; software is becoming something which is constantly evolving, continuously consumed, and recurrently purchased — everything a Bosch drill is not! In other words — software is now streamed.

The same thing is happening in the B2C market as well; we have gradually moving from the idea of “buying a product” to the idea of “consuming a service”; it might be the entertainment Netflix provides us, the mobility Uber enables us or the fashion experience that “Rent the Runway” makes possible.

So how come we still talk about Products, as if they were manufactured goods?

In my next post, I plan to review how this evolution of software affected some of our business and design theories, and why these changes must dramatically change the way we conduct “product management”.

Stay tuned …

I’m passionate about product, strategy and innovation.