Reading through Ben Thompson’s What is a Tech Company, one of the most fascinating aspects I’ve found in the evolution of software comes from the changes of ownerships – who (users or companies or 3rd parties) owns what (hardware, software, data, etc.).
(Old) IBM – Sell to you the hardwares (computers/servers) we made, so you can install the softwares we produced. (Heavy operational costs for IBM, like assets maintenance and IT training. But the bill is on customers.)
(Old) Microsoft – You have your own computers/servers; now you need to install the on-prem softwares we produced so it can work on your hardware. (Arguably the most effective/lucrative business model because of zero marginal cost for Microsoft – distributing softwares doesn’t cost anything.)
Salesforce – We run the softwares we produced in the servers we own. You don’t need to own your servers or softwares – they are off-premises. All you need is to use any web browser to access it. (The definition of SaaS. Has fixed cost for running servers etc. but again this is covered by up-front paid customers.)
Atlassian – Sell to companies without even talking to them. Freemium, Easy-to-pay, and Pay-As-You-Go, from anywhere by anyone. (An evolution from SaaS but it gives emphasis on the bottom-up approach and the democratization aspect.)
Software creates ecosystems.As a separate note shown above, it is also interesting to see what criteria Ben Thompson uses to define a tech company.
Software has zero marginal costs.
Software improves over time.
Software offers infinite leverage.
Software enables zero transaction costs.