5 ms·

Effect of the Depression on Technology

21 points by nreece 18y ago

helveticaman 18y ago
I would argue there will soon be an even larger proportion of users that will never, ever pay for anything, making Wesabe a bad investment.
- tjr 18y ago
  I will take this opportunity to pose a question I've been wondering for a while. It seems that there is an increasingly ubiquitous attitude that if a product or service can be delivered free of charge, then it should be delivered free of charge. Is this really the best road to be walking down? Why or why not?
  - abstractbill 18y ago
    If you don't, one of your competitors will.
    - DanielBMarkham 18y ago
      This is true. But you don't always want bottom-fishers as customers. It all comes down to a trade: your app's perceived value versus the user's time/money. You can try to fake-out the trade by making it a free app, but then a) you're just competing for eyeballs, which makes you a media company, and b) any incremental improvement will also be seen as free by the end-user. It's a lot harder to price up from free to one dollar than to price up from one dollar to ten dollars. And maybe you're the coolest media content provider out there, but I'd rather compete on value rather than on attention span. It's more comfortable for this nerd :)
  - kingkongrevenge 18y ago
    It's all based on advertising. Advertising will tank. So the "can" will go away.
  - tomjen 18y ago
    There is a large segment of the young people who grow up with access to video, games and music for free and who don't really have a lot of money so they feel that it is wrong if these things aren't available to them. Second the price for a given item (when traded freely in a free market) is generally declining over time and since the marginal price of all most all web offerings are zero (for all practical purposes) it is possible to underbid the competition all the way down to zero, landing it in the same category as the aforementioned music. And I don't know if that is a good thing or not (though I suspect it isn't, at least for most start ups) but if that doesn't matter if that is the direction we are heading.
    - 13ren 18y ago
      Yes, commoditization and "normal profits" of perfect competition. I think it's more your second point: it's not that someone should offer it for free if they can - but that someone will. Open source is part of this too: e.g. the eeePC has linux and openOffice. MS responded by offering low-end XP and low-end office for $40 on the eeePC. It's heading to $0. Also, WINE runs most windows apps on linux. When money is tight, these non-ideal options become more attractive. I think this is inevitable in all markets, with the old answer: offer something valuable and unique.
      - thomasmallen 18y ago
        Lower-end products (A "Word Lite", etc.) will be big business for budget-conscious consumers who will never see "OpenOffice - FREE" on a shopping comparison. I'm an open source guy, but at $20 a pop the Gnumeric guys would be rich. I know I'd buy in.
        13ren 18y ago
        That's a distribution channel problem if they'd "never see" it. Gnumeric could just package up and sell via that channel. It would seem weird to them ("huh? you just download it"), but if you're right, it would make a huge difference. Then you've got brand-name issues and packaging and the whole business thing which they aren't interested in, not good at, and MS is brilliant at.
  - davidw 18y ago
    From Varian and Shapiro's "Information Rules" (http://www.squeezedbooks.com/book/show/7/information-rules-a-strategic-guide-to-the-network-economy http://www.squeezedbooks.com/book/show/7/information-rules-a...): > Information commodities trend towards the marginal cost: zero, meaning that selling information commodities is not likely to be successful in the long run. The important thing is the marginal cost, not the cost of creating the thing in the first place. I'd highly recommend the book.
rms 18y ago
It's a depression now?
- jcl 18y ago
  Yes, and apparently the national debt and the trade deficit are the same thing. (Not that the article is bad, but I found the intro confusing.)
- gojomo 18y ago
  In the headline to attract clicks, it's a 'depression'. In the text, it's still a 'recession'. Everyone's a sensational-headline click-whore now, it seems.
davidw 18y ago
He sure seems to know a lot of things that other people aren't sure about: * It's a recession for sure, but depression? No one knows. Here's one guy who says no: http://online.wsj.com/article/SB122333679431409639.html http://online.wsj.com/article/SB122333679431409639.html * "this adds up to difficult times for business in America for at least three years and possibly longer." Three - not two, not four, but three. Hrm. * "with the US dollar in the gutter" - it's actually been climbing lately: http://finance.yahoo.com/q/bc?s=EURUSD=X&t=3m&l=on&z=m&q=l&c= http://finance.yahoo.com/q/bc?s=EURUSD=X&t=3m&l=on&#... No idea if that will last - I don't pretend to have a good understanding of why it would be rising right now, but it is, for the moment. I guess his points about open source and other cost savers doing well in a recession are valid, but the reddit-bait title and other stuff put me off.
- thomasmallen 18y ago
  Without figures, you're correct: His estimates are worthless. But if the US government stays the course and puts money up for all of the failing US companies, which seems to be the plan, the dollar will be in the gutter. Can't just print money, after all.
  - davidw 18y ago
    I think your analysis is somewhat facile, and unsupported by the facts: the dollar hasn't dropped at all because of the 'bailout' - quite the contrary, it has done well over the past few days. But once again, that's why this is hacker news, and not economic news: our area of expertise is not in economics, with a few exceptions (that certainly do not include me).
    - thomasmallen 18y ago
      "the facts: the dollar hasn't dropped at all because of the 'bailout' - quite the contrary, it has done well over the past few days." The bailout doesn't go into effect for at least a month. And as far as expertise goes, your website could use a few Exceptions ("printDate() is not defined") - sorry, couldn't resist.
lsc 18y ago
Personally, I just blew 4 months operating expenses on new server parts in preparation for launching a 'value for the dollar' initiative, so I obviously agree that businesses will become more cost sensitive. I wasn't thinking about the capex vs opex change, but that's good for me, too. Interesting times indeed.

21 points by nreece 18y ago

I would argue there will soon be an even larger proportion of users that will never, ever pay for anything, making Wesabe a bad investment.

tjr 18y ago
I will take this opportunity to pose a question I've been wondering for a while. It seems that there is an increasingly ubiquitous attitude that if a product or service can be delivered free of charge, then it should be delivered free of charge. Is this really the best road to be walking down? Why or why not?
- abstractbill 18y ago
  If you don't, one of your competitors will.
  - DanielBMarkham 18y ago
    This is true. But you don't always want bottom-fishers as customers. It all comes down to a trade: your app's perceived value versus the user's time/money. You can try to fake-out the trade by making it a free app, but then a) you're just competing for eyeballs, which makes you a media company, and b) any incremental improvement will also be seen as free by the end-user. It's a lot harder to price up from free to one dollar than to price up from one dollar to ten dollars. And maybe you're the coolest media content provider out there, but I'd rather compete on value rather than on attention span. It's more comfortable for this nerd :)
- kingkongrevenge 18y ago
  It's all based on advertising. Advertising will tank. So the "can" will go away.
- tomjen 18y ago
  There is a large segment of the young people who grow up with access to video, games and music for free and who don't really have a lot of money so they feel that it is wrong if these things aren't available to them. Second the price for a given item (when traded freely in a free market) is generally declining over time and since the marginal price of all most all web offerings are zero (for all practical purposes) it is possible to underbid the competition all the way down to zero, landing it in the same category as the aforementioned music. And I don't know if that is a good thing or not (though I suspect it isn't, at least for most start ups) but if that doesn't matter if that is the direction we are heading.
  - 13ren 18y ago
    Yes, commoditization and "normal profits" of perfect competition. I think it's more your second point: it's not that someone should offer it for free if they can - but that someone will. Open source is part of this too: e.g. the eeePC has linux and openOffice. MS responded by offering low-end XP and low-end office for $40 on the eeePC. It's heading to $0. Also, WINE runs most windows apps on linux. When money is tight, these non-ideal options become more attractive. I think this is inevitable in all markets, with the old answer: offer something valuable and unique.
    - thomasmallen 18y ago
      Lower-end products (A "Word Lite", etc.) will be big business for budget-conscious consumers who will never see "OpenOffice - FREE" on a shopping comparison. I'm an open source guy, but at $20 a pop the Gnumeric guys would be rich. I know I'd buy in.
      - 13ren 18y ago
        That's a distribution channel problem if they'd "never see" it. Gnumeric could just package up and sell via that channel. It would seem weird to them ("huh? you just download it"), but if you're right, it would make a huge difference. Then you've got brand-name issues and packaging and the whole business thing which they aren't interested in, not good at, and MS is brilliant at.
- davidw 18y ago
  From Varian and Shapiro's "Information Rules" (http://www.squeezedbooks.com/book/show/7/information-rules-a-strategic-guide-to-the-network-economy http://www.squeezedbooks.com/book/show/7/information-rules-a...): > Information commodities trend towards the marginal cost: zero, meaning that selling information commodities is not likely to be successful in the long run. The important thing is the marginal cost, not the cost of creating the thing in the first place. I'd highly recommend the book.

rms 18y ago

It's a depression now?

jcl 18y ago
Yes, and apparently the national debt and the trade deficit are the same thing. (Not that the article is bad, but I found the intro confusing.)
gojomo 18y ago
In the headline to attract clicks, it's a 'depression'. In the text, it's still a 'recession'. Everyone's a sensational-headline click-whore now, it seems.

davidw 18y ago

He sure seems to know a lot of things that other people aren't sure about: * It's a recession for sure, but depression? No one knows. Here's one guy who says no: http://online.wsj.com/article/SB122333679431409639.html http://online.wsj.com/article/SB122333679431409639.html * "this adds up to difficult times for business in America for at least three years and possibly longer." Three - not two, not four, but three. Hrm. * "with the US dollar in the gutter" - it's actually been climbing lately: http://finance.yahoo.com/q/bc?s=EURUSD=X&t=3m&l=on&z=m&q=l&c= http://finance.yahoo.com/q/bc?s=EURUSD=X&t=3m&l=on&#... No idea if that will last - I don't pretend to have a good understanding of why it would be rising right now, but it is, for the moment. I guess his points about open source and other cost savers doing well in a recession are valid, but the reddit-bait title and other stuff put me off.

thomasmallen 18y ago
Without figures, you're correct: His estimates are worthless. But if the US government stays the course and puts money up for all of the failing US companies, which seems to be the plan, the dollar will be in the gutter. Can't just print money, after all.
- davidw 18y ago
  I think your analysis is somewhat facile, and unsupported by the facts: the dollar hasn't dropped at all because of the 'bailout' - quite the contrary, it has done well over the past few days. But once again, that's why this is hacker news, and not economic news: our area of expertise is not in economics, with a few exceptions (that certainly do not include me).
  - thomasmallen 18y ago
    "the facts: the dollar hasn't dropped at all because of the 'bailout' - quite the contrary, it has done well over the past few days." The bailout doesn't go into effect for at least a month. And as far as expertise goes, your website could use a few Exceptions ("printDate() is not defined") - sorry, couldn't resist.

lsc 18y ago

Personally, I just blew 4 months operating expenses on new server parts in preparation for launching a 'value for the dollar' initiative, so I obviously agree that businesses will become more cost sensitive. I wasn't thinking about the capex vs opex change, but that's good for me, too. Interesting times indeed.