5 ms·

Back in the 1990s, this was Computer Associates entire business model: buy software that was past it's peak but still had active, paying users; Slap a CA logo

Back in the 1990s, this was Computer Associates entire business model: buy software that was past it's peak but still had active, paying users; Slap a CA logo on it; start charging through the nose. It's like a protection racket. You need that software, possibly have no good alternatives, and CA knew that. They rarely seemed to put much effort into maintaining anything either. I am surprised it's not a more popular business model now.

ISL 4y ago
I think the term of art is "unlocking value".
- hinkley 4y ago
  We've just found a new dress to stuff Corporate Raiding into. In the 1980's, when you weren't worrying about the someone accidentally starting WWIII, Japan completely unraveling the American Industrial Complex, Dungeons and Dragons turning your kids into satanists, marijuana turning your kids into crackheads (1980's meth epidemic) or treating your child's ADHD not being a sign of responsibility but declaring moral bankruptcy on your terrible parenting skills, you had to worry about your company's hard assets being worth more than your market cap, and a bunch of people staging a hostile takeover so they could sell your company for scrap to release that 'value' that is really your rainy day fund. See also "Other People's Money" starring Danny DeVito as a corporate raider/Pinocchio character.
  - hermitcrab 4y ago
    Maybe the money went out of being a patent troll, so they are trying a new model? Buy a once loved, but now defunct, product and try it on with everyone on their massive mailing list. Maybe enough suckers will pay to make it worthwhile?
dman 4y ago
That name brings back memories! Not of the good kind.
morelisp 4y ago
I think it's still very popular, but the companies involved do a better job hiding themselves. Idera and Scaleworks aren't super well-known names, sometimes even if you're stuck on one of their subsidiary products.
ouEight12 4y ago
There's currently some concern in IT circles that Broadcom is intending something similar to "The CA Business Model" with their vmware acquisition. :(
- kawsper 4y ago
  Broadcom bought CA, so they have experience with it first hand.
narrator 4y ago
Oracle does this too. They buy small companies with vertical line of business software with a lot of happy users and then raise prices and make it harder to integrate or switch away.
_jal 4y ago
Symantec plays this game now, and it looks like PE money likes it, too, so I expect more of this, and what results from it. (See also: SolarWinds)
blowski 4y ago
Insurance has a number of niche software products where this has happened. The license fee goes up by 1000%, with zero investment in the product. It takes companies a decade to get off, and the new owners enjoy the proceeds in the meantime.
- yashap 4y ago
  In the open source world, Akka, the most popular actor system library in the JVM ecosystem, that’s heavily used in tonnes of open source projects, recently went from “free and open source” to “paid/proprietary and source available.” https://github.com/akka/akka/pull/31561 https://github.com/akka/akka/pull/31561 Same strategy - the pricing is insanely high (for a library), and the project is effectively dead now, but it’ll take some larger enterprises awhile to move away from. I find it especially sleazy due to the nature of transitive dependencies in open source. For example, somebody creates a popular open source lib out of their own sense of good will, let’s call it “Foo lib.” It depends on Akka, all is fine for years, then all of the sudden Typelevel (Akka maintainers) say “physche, Akka is proprietary now, Foo lib users now owe us $$$.” Gross.
  - woah 4y ago
    Couldn't they just not upgrade the Akka dep?
    - yashap 4y ago
      Yes, but not for long. Typelevel will patch the last open source version (2.6) with critical security updates for the next year (until Sept 2023), but not afterwards.
      - woah 4y ago
        Then they should maintain it themselves, or pay the maintainers what they are asking for
  - londons_explore 4y ago
bpodgursky 4y ago
P/E ratios are so wild now that you need to be able to extract an extraordinary amount of money in the 3-5 years before people finally manage to migrate off your platform, to pay off the initial purchase.
jlarocco 4y ago
On one hand, it's a crappy business model, but on the other hand, is it really? Vendor lock-in sucks, but people have been warning about it forever.
- jacobr1 4y ago
  The thing that sucks is not taking care of your customers. There are plenty of small vendors out there where alternatives are limited that still provide good customer service. These vendors may even charge a premium price for their niche service, but they don't exploit merely because they can. There was a great article the other day on the floppydisk.com. It seems like he has a few customers totally reliant on legacy disk where could probably change 100x his current rates. But they'd hate him for it. It also would alienate anyone not held ransom and accelerate migration efforts. Instead he provides a good service, supports hobbyists, and has pivoted his business model several times over the decades to support customer demand. Pissing off your customers isn't good business if you want to keep them long term or maintain a reputation (in order to gain new customers or expand into different business-lines).
jrochkind1 4y ago
> I am surprised it's not a more popular business model now. I mean, it's pretty popular? Basically what happened to Travis CI, right? There's a spectrum of how bad it can be (how much they raise prices, how far maintenance/support drops), but it's kind of what "equity partners" generally do with purchased software companies.
justsomehnguy 4y ago
Didn't you heard about vmware and Brocade recently?
rmason 4y ago
To be fair CA did a good job of fixing any bugs in the products they bought. But that was about it along with increasing the price. To make it work they had to keep acquiring companies. In the end even that wasn't enough so they ended up engaging in fraud to keep their stock price climbing. https://money.cnn.com/2006/04/24/technology/kumar/index.htm https://money.cnn.com/2006/04/24/technology/kumar/index.htm
- smackeyacky 4y ago
  I didn't realise that is what happened so thanks for the link.
pragmatic 4y ago
It’s called Private Equity and it’s hugely popular. The trend in recent years is buying up software in verticals, gluing it together and flipping it to the next flipper.

ISL 4y ago

I think the term of art is "unlocking value".

hinkley 4y ago
We've just found a new dress to stuff Corporate Raiding into. In the 1980's, when you weren't worrying about the someone accidentally starting WWIII, Japan completely unraveling the American Industrial Complex, Dungeons and Dragons turning your kids into satanists, marijuana turning your kids into crackheads (1980's meth epidemic) or treating your child's ADHD not being a sign of responsibility but declaring moral bankruptcy on your terrible parenting skills, you had to worry about your company's hard assets being worth more than your market cap, and a bunch of people staging a hostile takeover so they could sell your company for scrap to release that 'value' that is really your rainy day fund. See also "Other People's Money" starring Danny DeVito as a corporate raider/Pinocchio character.
- hermitcrab 4y ago
  Maybe the money went out of being a patent troll, so they are trying a new model? Buy a once loved, but now defunct, product and try it on with everyone on their massive mailing list. Maybe enough suckers will pay to make it worthwhile?

dman 4y ago

That name brings back memories! Not of the good kind.

morelisp 4y ago

I think it's still very popular, but the companies involved do a better job hiding themselves. Idera and Scaleworks aren't super well-known names, sometimes even if you're stuck on one of their subsidiary products.

ouEight12 4y ago

There's currently some concern in IT circles that Broadcom is intending something similar to "The CA Business Model" with their vmware acquisition. :(

kawsper 4y ago
Broadcom bought CA, so they have experience with it first hand.

narrator 4y ago

Oracle does this too. They buy small companies with vertical line of business software with a lot of happy users and then raise prices and make it harder to integrate or switch away.

_jal 4y ago

Symantec plays this game now, and it looks like PE money likes it, too, so I expect more of this, and what results from it. (See also: SolarWinds)

blowski 4y ago

Insurance has a number of niche software products where this has happened. The license fee goes up by 1000%, with zero investment in the product. It takes companies a decade to get off, and the new owners enjoy the proceeds in the meantime.

yashap 4y ago
In the open source world, Akka, the most popular actor system library in the JVM ecosystem, that’s heavily used in tonnes of open source projects, recently went from “free and open source” to “paid/proprietary and source available.” https://github.com/akka/akka/pull/31561 https://github.com/akka/akka/pull/31561 Same strategy - the pricing is insanely high (for a library), and the project is effectively dead now, but it’ll take some larger enterprises awhile to move away from. I find it especially sleazy due to the nature of transitive dependencies in open source. For example, somebody creates a popular open source lib out of their own sense of good will, let’s call it “Foo lib.” It depends on Akka, all is fine for years, then all of the sudden Typelevel (Akka maintainers) say “physche, Akka is proprietary now, Foo lib users now owe us $$$.” Gross.
- woah 4y ago
  Couldn't they just not upgrade the Akka dep?
  - yashap 4y ago
    Yes, but not for long. Typelevel will patch the last open source version (2.6) with critical security updates for the next year (until Sept 2023), but not afterwards.
    - woah 4y ago
      Then they should maintain it themselves, or pay the maintainers what they are asking for
- londons_explore 4y ago

bpodgursky 4y ago

P/E ratios are so wild now that you need to be able to extract an extraordinary amount of money in the 3-5 years before people finally manage to migrate off your platform, to pay off the initial purchase.

jlarocco 4y ago

On one hand, it's a crappy business model, but on the other hand, is it really? Vendor lock-in sucks, but people have been warning about it forever.

jacobr1 4y ago
The thing that sucks is not taking care of your customers. There are plenty of small vendors out there where alternatives are limited that still provide good customer service. These vendors may even charge a premium price for their niche service, but they don't exploit merely because they can. There was a great article the other day on the floppydisk.com. It seems like he has a few customers totally reliant on legacy disk where could probably change 100x his current rates. But they'd hate him for it. It also would alienate anyone not held ransom and accelerate migration efforts. Instead he provides a good service, supports hobbyists, and has pivoted his business model several times over the decades to support customer demand. Pissing off your customers isn't good business if you want to keep them long term or maintain a reputation (in order to gain new customers or expand into different business-lines).

jrochkind1 4y ago

> I am surprised it's not a more popular business model now. I mean, it's pretty popular? Basically what happened to Travis CI, right? There's a spectrum of how bad it can be (how much they raise prices, how far maintenance/support drops), but it's kind of what "equity partners" generally do with purchased software companies.

justsomehnguy 4y ago

Didn't you heard about vmware and Brocade recently?

rmason 4y ago

To be fair CA did a good job of fixing any bugs in the products they bought. But that was about it along with increasing the price. To make it work they had to keep acquiring companies. In the end even that wasn't enough so they ended up engaging in fraud to keep their stock price climbing. https://money.cnn.com/2006/04/24/technology/kumar/index.htm https://money.cnn.com/2006/04/24/technology/kumar/index.htm

smackeyacky 4y ago
I didn't realise that is what happened so thanks for the link.

pragmatic 4y ago

It’s called Private Equity and it’s hugely popular. The trend in recent years is buying up software in verticals, gluing it together and flipping it to the next flipper.