Software as a Service Industry

Curt Schacker, apparently a veteran of the embedded software industry (well, his resume looks good anyway), has an interesting article on on how he sees the state of the embedded software industry. His contention is that we’ve been been trying to shove a giant square peg in a giant round hole (his words, not mine), and that the embedded software industry is really a service industry and isn’t well served by off the shelf software.

Now mind you Curt is a co-founder of, you guessed it, an embedded services company. But I have definitely seen the trend, especially in the tools area. It is really hard to sell software development tools in a box. Every customer seems to have different processes, different configuration management systems, build systems, coding standards, you name it. It is very difficult to build a suite of tools to satisfy them all.

The biggest success stories I’ve been a part of in this industry is when we sell the customer a box, but then follow it up with intensive support or custom development to make the software in the box work best for them. There’s nothing worse, for me anyway, to have a customer who bought my box, but then let it sit on the shelf because it didn’t really meet his needs. It’s not so good for the reputation and future sales.

This is where programs like Eclipse really play into the business needs of software vendors. First, by sharing the development costs with other companies, our boxes are cheaper to produce. However, with Eclipse’s extensibility and customizability, it is easier to take those products and customize them for individual customer’s needs. Selling services may be more difficult and, as Curt mentions, doesn’t provide the multiples that products do, but it might be the right approach that customers have always wanted and the best road to profitibility for software vendors.