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I'd suggest that the vast bulk of software is written for inhouse use and B2B use, not consumer use. The impression you have would boil down to sample bias. Th

I'd suggest that the vast bulk of software is written for inhouse use and B2B use, not consumer use. The impression you have would boil down to sample bias. This is simply a reflection of the "structure of production": for any given consumer product, there is a vast graph of exchanges and transformations that lead to it. Most of the inventory and money is not passing between consumers and consumer companies. It is in the structure of production. Consider: manufacturing is not instantaneous. Primary resource production is not instantaneous. Transportation is not instantaneous. Tertiary services are not instantaneous. Per Little's Law, average items in a system = average throughput * average item latency. The consumer market is the throughput. The structure of production represents a multiple of the consumer market. The reason we overweight consumer brands is because they are consumer brands. Within each industry and niche, everyone knows who the leading firms are. But outside the niche, nobody knows that a) the firms exist or b) that the niche exists. But all of us are in the consumer market, so we all know about consumer brands (they literally make it their business to ensure this is so). Every journalist can write about a consumer brand. Every reader can read about the consumer brand. So on sheer volume, consumer brands are vastly overrepresented in the media relative to their total share of the economy. So even a relatively small lead in consumer-facing firms will seem much larger than it actually is. B2B is a massive segment in the US software market. But it's the invisible dark matter of our industry: it constitutes almost all of the mass in the software universe, but few folks realise it's there unless it's pointed out.

hef19898 8y ago
Nicely written and ao true. In the B2B market revenue streams a lot more stable. Less sexy, sure. But the problems tend to be harder as well, compared to say developing an app to have other peoples dogs walked.
TheAceOfHearts 8y ago
I wish I could upvote this comment again. When I joined the industry as a software engineer I was blown away by all the large companies in the space which I'd never even heard of. And I'd agree that despite it not being nearly as sexy, it's way more stable and you generally get to tackle more interesting problems. There are plenty of companies most people have probably never heard of which are basically setup as infrastructure or support for the Fortune 500.
chibg10 8y ago
> So even a relatively small lead in consumer-facing firms will seem much larger than it actually is. No? Leading consumer brands are a lot bigger than B2B brands for the most part because B2C in the aggregate economy has to be bigger than B2B (in $) and because B2B is a more fragmented and specialized market than B2C (i.e. harder to gain large market share). Just look at the biggest tech companies by market cap/valuation: Apple (B2C), Amazon (mixed, debatable), Google (B2C-designed products), Microsoft (mixed, more B2B), Facebook (B2C-designed products), Alibaba (B2C), Tencent (B2C), Oracle (B2B), IBM (B2B), Netflix (B2C), Uber (B2C), Baidu (B2C). You don't find a pure B2B company until Oracle, which is ~20% the size of the Apple. This makes sense as well. The ultimate source of private sector profit comes from selling to the consumer. There's no point of a B2B company if there are no businesses selling to consumers (ignoring governments). If the B2B space is bigger than B2C, businesses would, on aggregate, be buying more from other businesses that they would be selling to consumers. In other words, they'd be losing money and such a system wouldn't sustainable for long. Of course, we're focusing on tech, and tech is a subsegment of the overall economy, etc., so it's possible that tech as a sector is more B2B than B2C... but this a question that will have to answered with data, not assertions.
- e12e 8y ago
  > Just look at the biggest tech companies by market cap/valuation: Apple (B2C), Amazon (mixed, debatable), Google (B2C-designed products), Microsoft (mixed, more B2B), Facebook (B2C-designed products), Alibaba (B2C), Tencent (B2C), Oracle (B2B), IBM (B2B), Netflix (B2C), Uber (B2C), Baidu (B2C). You don't find a pure B2B company until Oracle, which is ~20% the size of the Apple. Google and Facebook are advertising companies - literally b2b?
  - navalsaini 8y ago
    Not quite. They just monetise in the manner. The core value-proposition is very much b2c in both above cases.
- jacques_chester 8y ago
  My argument here is about the sum of activity across the entire economy. There are thousands of companies writing software for thousands of distinct niches and industries. Millions of businesses world wide have software that was written by them or for them. Every line of COBOL in a bank basement, every SCADA gadget, every drill screen on a wildcatter rig, every MS Access database responsible for the work of 3 people in an office in rural England ... the sum value and volume of software we don't see and don't recognise is staggering. More to the point, it would be mathematically impossible for the structure of production to be smaller than the consumer market. Unless you are producing something from nothing, or producing instantaneously, or both, then the absolute minimum possible size for the structure of production is to be precisely equivalent to the consumer market. This is clearly not what we observe.

hef19898 8y ago

Nicely written and ao true. In the B2B market revenue streams a lot more stable. Less sexy, sure. But the problems tend to be harder as well, compared to say developing an app to have other peoples dogs walked.

TheAceOfHearts 8y ago

I wish I could upvote this comment again. When I joined the industry as a software engineer I was blown away by all the large companies in the space which I'd never even heard of. And I'd agree that despite it not being nearly as sexy, it's way more stable and you generally get to tackle more interesting problems. There are plenty of companies most people have probably never heard of which are basically setup as infrastructure or support for the Fortune 500.

chibg10 8y ago

> So even a relatively small lead in consumer-facing firms will seem much larger than it actually is. No? Leading consumer brands are a lot bigger than B2B brands for the most part because B2C in the aggregate economy has to be bigger than B2B (in $) and because B2B is a more fragmented and specialized market than B2C (i.e. harder to gain large market share). Just look at the biggest tech companies by market cap/valuation: Apple (B2C), Amazon (mixed, debatable), Google (B2C-designed products), Microsoft (mixed, more B2B), Facebook (B2C-designed products), Alibaba (B2C), Tencent (B2C), Oracle (B2B), IBM (B2B), Netflix (B2C), Uber (B2C), Baidu (B2C). You don't find a pure B2B company until Oracle, which is ~20% the size of the Apple. This makes sense as well. The ultimate source of private sector profit comes from selling to the consumer. There's no point of a B2B company if there are no businesses selling to consumers (ignoring governments). If the B2B space is bigger than B2C, businesses would, on aggregate, be buying more from other businesses that they would be selling to consumers. In other words, they'd be losing money and such a system wouldn't sustainable for long. Of course, we're focusing on tech, and tech is a subsegment of the overall economy, etc., so it's possible that tech as a sector is more B2B than B2C... but this a question that will have to answered with data, not assertions.

e12e 8y ago
> Just look at the biggest tech companies by market cap/valuation: Apple (B2C), Amazon (mixed, debatable), Google (B2C-designed products), Microsoft (mixed, more B2B), Facebook (B2C-designed products), Alibaba (B2C), Tencent (B2C), Oracle (B2B), IBM (B2B), Netflix (B2C), Uber (B2C), Baidu (B2C). You don't find a pure B2B company until Oracle, which is ~20% the size of the Apple. Google and Facebook are advertising companies - literally b2b?
- navalsaini 8y ago
  Not quite. They just monetise in the manner. The core value-proposition is very much b2c in both above cases.
jacques_chester 8y ago
My argument here is about the sum of activity across the entire economy. There are thousands of companies writing software for thousands of distinct niches and industries. Millions of businesses world wide have software that was written by them or for them. Every line of COBOL in a bank basement, every SCADA gadget, every drill screen on a wildcatter rig, every MS Access database responsible for the work of 3 people in an office in rural England ... the sum value and volume of software we don't see and don't recognise is staggering. More to the point, it would be mathematically impossible for the structure of production to be smaller than the consumer market. Unless you are producing something from nothing, or producing instantaneously, or both, then the absolute minimum possible size for the structure of production is to be precisely equivalent to the consumer market. This is clearly not what we observe.