8 ms·

As usual, Jeff mixes different concepts, does some hand-waving and comes to a stunningly weird conclusion. What Microsoft did with artificial memory limitation

As usual, Jeff mixes different concepts, does some hand-waving and comes to a stunningly weird conclusion. What Microsoft did with artificial memory limitation is ridiculous, unless someone comes up to offer a reasonable technical explanation. However, I find it equally ridiculous to jump from there to a conclusion that open source is better because it does no market segmentation. Let's keep one thing clear, if you're not selling your product then you won't do any market segmentation for it. You might, however, do market segmentation when it comes to offering support for that product. Does that make you as evil as Microsoft? Are 37 Signals evil because they offer different plans whose prices probably don't scale linearly with the costs behind them (in other words, they don't get the same profit across plans)? Of course, Jeff didn't actually use the word "evil", but the implication of moral inferiority is almost palpable. Open source has many advantages (and disadvantages, too), but not segmenting the market is not one of those; rather, it's a consequence of not selling the software itself.

bad_user 17y ago
> but not segmenting the market is not one of those; rather, it's a consequence of not selling the software itself. Consequence or not, how can it not be an advantage?
- CodeMage 17y ago
  Because market segmentation in itself, as a concept, is not a disadvantage, which means that lack of it is not an advantage in itself. Like I said, market segmentation in software does not necessarily have to be a bad thing. Consider a hypothetical text editor that comes in two editions. The "basic" edition has features like syntax highlighting, regex search and replace, etc. The "advanced" edition has a feature that allows you to open and save files not just locally, but also via SFTP. When it was first written, the editor didn't have the SFTP feature, the author developed it because there were some users who asked for it; they weren't the majority, but the author thought the idea was nice. Instead of incorporating that feature into the one and only edition, the author decided to offer two editions: a cheaper "basic" and a more expensive "advanced" edition. It was the author's idea of placing value on the effort involved in writing the SFTP feature. The majority of users can go on happily using the "basic" edition without paying extra for it, while those who really want SFTP can pay for it. One way of looking at this market segmentation is to say that the author was greedy and imposed an artificial limitation on one of the editions in his product. Another way of looking at it is to say that the author offers two products that satisfy different needs at different costs. If we were talking about two products from two different authors, we would be comparing their features and prices quite naturally, without complaining about market segmentation. However, when you're offering exactly the same product, with no differences, for two different prices, then you're just being greedy and taking advantage of your customers (which is something commonplace nowadays and most people, myself included, just accept it). Close to that is the situation in which you slap a truly artificial restriction on a cheaper edition of your product, not through a lack of feature, but through a deliberate crippling of that feature (e.g. the five-dollar edition can open only up to 3 files). The exception, of course, is a crippled free edition which allows potential customers to try your product before deciding whether to buy it. In that case, you're just being annoying ;) That, in summary, is why I believe that market segmentation is an advantage, within certain ethical bounds.
  - Chickencha 17y ago
    To me, market segmentation is different when it comes to software. In your text editor example, the author can add an SFTP feature, but once it's coded it's coded. There's no extra cost to ship out all software with that feature after it's coded, except perhaps some extra support costs. (I imagine those would be pretty minimal.) At that point, I only see two reasons to segment the market from the users' perspective: 1) To not confuse your less advanced users with more features. This is a pretty weak reason, IMO. 2) To make sure that the people who actually wanted the feature are the ones paying for it. After the cost of development is paid for, this reason goes away. Beyond these reasons (unless I'm missing something, which is entirely possible), releasing different grades of software just hurts your users. It makes you more money, though, so maybe that's enough justification.
    - sdfx 17y ago
      >There's no extra cost to ship out all software with that feature after it's coded By this logic, Chipmaker should only sell their most powerful processors, because the actual manufacturing-cost is not really the reason for the price difference between a top of the line i7 processor and a different one with lower specs. You can look at it from a different angle: Let's say you have a powerful program and you are charging 1000$ for it (e.g. Photoshop). Your market research has shown that a lot of "casual user" are looking for a product like the one you are selling, but are not willing to pay the 1000$. So you develop a version without the more advanced functions and sell it for 200$ (e.g. Photoshop Elements). It's not really about "not confusing the user", but about offering another option. How does this hurt the consumer?
      - shard 17y ago
        I think that actual manufacturing costs are often the reason for price differences between a top of the line and one with lower specs. The processor dies are huge and costly, and throwing out non-perfect dies is undesirable. Due to the intricacies of silicon manufacturing, the same design can have different maximum speeds on different dies, and due to defects, the same design can have different operational sections on different dies. This leads to speed grading and the disabling of cores/caches, and hence a whole line of chips from one design.
ShabbyDoo 17y ago
Do they need a reasonable technical explanation? It's their ball, and they can take it home if you don't want to play by their rules. Don't like it? Then, run MySQL/Postgres on Linux. Perhaps avoiding customer anger is reason enough to avoid arbitrary limitations.
gizmo 17y ago
> a reasonable technical explanation Alright, I can come up with a reasonable explanation: For databases and servers a lot of bugs and corner cases are only hit by servers that get loads and loads of traffic. Fixing those bugs cost a significant amount of money. By charging more to the high-traffic servers the cost of fixing those bugs can be justified. It is also fair, in a sense, because only the high throughput servers really benefit from the extensive testing and stability, so why shouldn't they be the ones to pay for the fixes?
- CodeMage 17y ago
  I agree with charging more for the Datacenter edition than for Standard edition, for those same reasons . But that's not a reasonable technical explanation for artificially limiting the amount of memory your OS can use. I was specifically referring to that issue.
- maw 17y ago
  Exactly. And to be fair, Novell and Red Hat have done similar things with SLE and RHEL and, come to think of it, openSUSE and Fedora. Since the code's open, it isn't quite the same, but both offer different levels of service and maintenance, available at varying prices.
davidw 17y ago
For a serious treatment of this subject, I'm going to keep trotting out "Information Rules" by Varian and Shapiro. (Yeah, I also have a summary "somewhere", but go buy it, it's worth it!).
ilyak 17y ago
He didn't say that opensource is better; he just said that you always get the best, 100%, full edition of it. However, this might be not true for dual-licensed software.
- jussij 17y ago
  He implied it when he said 'opensource was awesome' and suggested the Microsoft offering was not.
10ren 17y ago
Linux comes in more editions than Windows. All the same price ($0), but you have to think, which was Jeff's point. And you have to think more than for Windows. It's the blessing+curse of diversity.
lunchbox 17y ago
>What Microsoft did with artificial memory limitation is ridiculous, unless someone comes up to offer a reasonable technical explanation. There is no technical explanation. It's purely for business reasons. This limitation seems artificial, but it's no different from any other software product that comes in multiple editions: A software company (e.g. Adobe, IBM, Oracle, Apple, Microsoft) develops a software product; when the product is ready to ship, they call it "[Product Name] Professional Edition". Then the company cripples the product a bit (sometimes by deleting a few lines of code that enable important functionality) and calls that version "Standard Edition". Then they cripple it even more and call that version "Starter Edition". All they are doing is manipulating bits to give people an incentive to pay top dollar, just as Microsoft did. Giving everyone the full functionality wouldn't cost them any more, since it's all just extra bits, which cost the company $0 to copy (actually, they need to spend millions of dollars building, testing and maintaining these crippled editions, so they would actually save on costs if they didn't cripple the software). I understand that what Microsoft is doing with the 32 GB limitation feels different and ridiculous, but it really isn't.
- patio11 17y ago
  This limitation seems artificial, but it's no different from any other software product that comes in multiple editions Right. For example, if a totally hypothetical individual developed a collaborative knowledge-base system and offered it as a service, they might decide to arbitrarily segment the market based on page views. Now, one might make the argument that there is actually a cost associated with page views whereas there is not a cost with having your software recognize all the memory on a third party's machine, but just between us businessmen we can agree that that is malarky. For one, the cost of a marginal pageview is too small to be measured but the price to the customer of that page view is about ten thousand dollars in the first year if it was their millionth-and-first page view in January. For another, the cost the 9 million page views separating tier #2 of the hypothetical service from tier #1 is far, far less than the pricing differential.
barrkel 17y ago
It's not "ridiculous"; the "technical explanation" is because it makes more money. It's just business.
codinghorror 17y ago
Do you really believe that the 37signals approach is not effectively the same thing? Consider the basecamp $99 plan vs the basecamp $49 plan: 100 projects / 35 projects vs. 20 GB storage / 10 GB storage Do you really believe those extra 10 GB and 65 projects cost 37signals $50 a month to deliver to you? Similarly, do you really believe that the cost of supporting 48 GB of memory versus 32 GB cost Microsoft $1000 per customer to build? Wolf in sheep's clothing, exact same concept with Web 2.0 patina. Rich customers pay more. Anyway, my argument isn't really about the money, but the mental friction. I'm sick of dealing with marketing weasel feature matrices
- ZeroGravitas 17y ago
  There is worse in the enterprise market, where they basically charge exactly what you can afford (sometimes a bit more) ratcheting it up as you get more and more locked-in. Read about software pricing economics and how you just have to suck it up till you hit the "Fuck You Oracle" point here: http://blogs.sun.com/bmc/date/20040828#the_economics_of_software http://blogs.sun.com/bmc/date/20040828#the_economics_of_soft... Amusingly, it looks like he'll be an Oracle employee since they are now buying Sun. (Note, this is "just business" as far as I'm concerned, i.e. about .7 on the weasel scale. What saddens me is organisations too short-sighted or misinformed to see the trap they are lumbering into as they are too distracted by salesmen with slick powerpoints, particularly if they are governments wasting my tax dollars)
- patio11 17y ago
  I'd agree, companies which sell software products by-the-license and companies which sell software products by-the-month are both in, essentially, the same business. They've both got price/feature matrices, even the lowly shareware company, which at the simplest level has a "Trial" and "Paid Version" two-column matrix. This is nothing to get worked up over -- it is a fundamental fact of our industry. We charge money for value, and value exceeds marginal cost by a stupendous amount. I'm sick of dealing with marketing weasel feature matrices This line would be funnier if there were an ironic marker or perhaps some indication that it was self-deprecating humor. As it is, it sort of sounds like you mean what you're saying. Which would be... interesting in light of your own business model, announced like two days ago. http://www.stackexchange.com/ http://www.stackexchange.com/
shin_lao 17y ago
I sincerely think the aim of his posts is to please his audience, get attention. The posts are more and more noisy, pointless and irrelevant. It looks as if he's forcing to write an entry regularly, even when he's got nothing to say. You can always sum up a post as "X is very bad except when it's not" or "Y is very good except when it's not".

bad_user 17y ago

> but not segmenting the market is not one of those; rather, it's a consequence of not selling the software itself. Consequence or not, how can it not be an advantage?

CodeMage 17y ago
Because market segmentation in itself, as a concept, is not a disadvantage, which means that lack of it is not an advantage in itself. Like I said, market segmentation in software does not necessarily have to be a bad thing. Consider a hypothetical text editor that comes in two editions. The "basic" edition has features like syntax highlighting, regex search and replace, etc. The "advanced" edition has a feature that allows you to open and save files not just locally, but also via SFTP. When it was first written, the editor didn't have the SFTP feature, the author developed it because there were some users who asked for it; they weren't the majority, but the author thought the idea was nice. Instead of incorporating that feature into the one and only edition, the author decided to offer two editions: a cheaper "basic" and a more expensive "advanced" edition. It was the author's idea of placing value on the effort involved in writing the SFTP feature. The majority of users can go on happily using the "basic" edition without paying extra for it, while those who really want SFTP can pay for it. One way of looking at this market segmentation is to say that the author was greedy and imposed an artificial limitation on one of the editions in his product. Another way of looking at it is to say that the author offers two products that satisfy different needs at different costs. If we were talking about two products from two different authors, we would be comparing their features and prices quite naturally, without complaining about market segmentation. However, when you're offering exactly the same product, with no differences, for two different prices, then you're just being greedy and taking advantage of your customers (which is something commonplace nowadays and most people, myself included, just accept it). Close to that is the situation in which you slap a truly artificial restriction on a cheaper edition of your product, not through a lack of feature, but through a deliberate crippling of that feature (e.g. the five-dollar edition can open only up to 3 files). The exception, of course, is a crippled free edition which allows potential customers to try your product before deciding whether to buy it. In that case, you're just being annoying ;) That, in summary, is why I believe that market segmentation is an advantage, within certain ethical bounds.
- Chickencha 17y ago
  To me, market segmentation is different when it comes to software. In your text editor example, the author can add an SFTP feature, but once it's coded it's coded. There's no extra cost to ship out all software with that feature after it's coded, except perhaps some extra support costs. (I imagine those would be pretty minimal.) At that point, I only see two reasons to segment the market from the users' perspective: 1) To not confuse your less advanced users with more features. This is a pretty weak reason, IMO. 2) To make sure that the people who actually wanted the feature are the ones paying for it. After the cost of development is paid for, this reason goes away. Beyond these reasons (unless I'm missing something, which is entirely possible), releasing different grades of software just hurts your users. It makes you more money, though, so maybe that's enough justification.
  - sdfx 17y ago
    >There's no extra cost to ship out all software with that feature after it's coded By this logic, Chipmaker should only sell their most powerful processors, because the actual manufacturing-cost is not really the reason for the price difference between a top of the line i7 processor and a different one with lower specs. You can look at it from a different angle: Let's say you have a powerful program and you are charging 1000$ for it (e.g. Photoshop). Your market research has shown that a lot of "casual user" are looking for a product like the one you are selling, but are not willing to pay the 1000$. So you develop a version without the more advanced functions and sell it for 200$ (e.g. Photoshop Elements). It's not really about "not confusing the user", but about offering another option. How does this hurt the consumer?
    - shard 17y ago
      I think that actual manufacturing costs are often the reason for price differences between a top of the line and one with lower specs. The processor dies are huge and costly, and throwing out non-perfect dies is undesirable. Due to the intricacies of silicon manufacturing, the same design can have different maximum speeds on different dies, and due to defects, the same design can have different operational sections on different dies. This leads to speed grading and the disabling of cores/caches, and hence a whole line of chips from one design.

ShabbyDoo 17y ago

Do they need a reasonable technical explanation? It's their ball, and they can take it home if you don't want to play by their rules. Don't like it? Then, run MySQL/Postgres on Linux. Perhaps avoiding customer anger is reason enough to avoid arbitrary limitations.

gizmo 17y ago

> a reasonable technical explanation Alright, I can come up with a reasonable explanation: For databases and servers a lot of bugs and corner cases are only hit by servers that get loads and loads of traffic. Fixing those bugs cost a significant amount of money. By charging more to the high-traffic servers the cost of fixing those bugs can be justified. It is also fair, in a sense, because only the high throughput servers really benefit from the extensive testing and stability, so why shouldn't they be the ones to pay for the fixes?

CodeMage 17y ago
I agree with charging more for the Datacenter edition than for Standard edition, for those same reasons . But that's not a reasonable technical explanation for artificially limiting the amount of memory your OS can use. I was specifically referring to that issue.
maw 17y ago
Exactly. And to be fair, Novell and Red Hat have done similar things with SLE and RHEL and, come to think of it, openSUSE and Fedora. Since the code's open, it isn't quite the same, but both offer different levels of service and maintenance, available at varying prices.

davidw 17y ago

For a serious treatment of this subject, I'm going to keep trotting out "Information Rules" by Varian and Shapiro. (Yeah, I also have a summary "somewhere", but go buy it, it's worth it!).

ilyak 17y ago

He didn't say that opensource is better; he just said that you always get the best, 100%, full edition of it. However, this might be not true for dual-licensed software.

jussij 17y ago
He implied it when he said 'opensource was awesome' and suggested the Microsoft offering was not.

10ren 17y ago

Linux comes in more editions than Windows. All the same price ($0), but you have to think, which was Jeff's point. And you have to think more than for Windows. It's the blessing+curse of diversity.

lunchbox 17y ago

>What Microsoft did with artificial memory limitation is ridiculous, unless someone comes up to offer a reasonable technical explanation. There is no technical explanation. It's purely for business reasons. This limitation seems artificial, but it's no different from any other software product that comes in multiple editions: A software company (e.g. Adobe, IBM, Oracle, Apple, Microsoft) develops a software product; when the product is ready to ship, they call it "[Product Name] Professional Edition". Then the company cripples the product a bit (sometimes by deleting a few lines of code that enable important functionality) and calls that version "Standard Edition". Then they cripple it even more and call that version "Starter Edition". All they are doing is manipulating bits to give people an incentive to pay top dollar, just as Microsoft did. Giving everyone the full functionality wouldn't cost them any more, since it's all just extra bits, which cost the company $0 to copy (actually, they need to spend millions of dollars building, testing and maintaining these crippled editions, so they would actually save on costs if they didn't cripple the software). I understand that what Microsoft is doing with the 32 GB limitation feels different and ridiculous, but it really isn't.

patio11 17y ago
This limitation seems artificial, but it's no different from any other software product that comes in multiple editions Right. For example, if a totally hypothetical individual developed a collaborative knowledge-base system and offered it as a service, they might decide to arbitrarily segment the market based on page views. Now, one might make the argument that there is actually a cost associated with page views whereas there is not a cost with having your software recognize all the memory on a third party's machine, but just between us businessmen we can agree that that is malarky. For one, the cost of a marginal pageview is too small to be measured but the price to the customer of that page view is about ten thousand dollars in the first year if it was their millionth-and-first page view in January. For another, the cost the 9 million page views separating tier #2 of the hypothetical service from tier #1 is far, far less than the pricing differential.

barrkel 17y ago

It's not "ridiculous"; the "technical explanation" is because it makes more money. It's just business.

codinghorror 17y ago

Do you really believe that the 37signals approach is not effectively the same thing? Consider the basecamp $99 plan vs the basecamp $49 plan: 100 projects / 35 projects vs. 20 GB storage / 10 GB storage Do you really believe those extra 10 GB and 65 projects cost 37signals $50 a month to deliver to you? Similarly, do you really believe that the cost of supporting 48 GB of memory versus 32 GB cost Microsoft $1000 per customer to build? Wolf in sheep's clothing, exact same concept with Web 2.0 patina. Rich customers pay more. Anyway, my argument isn't really about the money, but the mental friction. I'm sick of dealing with marketing weasel feature matrices

ZeroGravitas 17y ago
There is worse in the enterprise market, where they basically charge exactly what you can afford (sometimes a bit more) ratcheting it up as you get more and more locked-in. Read about software pricing economics and how you just have to suck it up till you hit the "Fuck You Oracle" point here: http://blogs.sun.com/bmc/date/20040828#the_economics_of_software http://blogs.sun.com/bmc/date/20040828#the_economics_of_soft... Amusingly, it looks like he'll be an Oracle employee since they are now buying Sun. (Note, this is "just business" as far as I'm concerned, i.e. about .7 on the weasel scale. What saddens me is organisations too short-sighted or misinformed to see the trap they are lumbering into as they are too distracted by salesmen with slick powerpoints, particularly if they are governments wasting my tax dollars)
patio11 17y ago
I'd agree, companies which sell software products by-the-license and companies which sell software products by-the-month are both in, essentially, the same business. They've both got price/feature matrices, even the lowly shareware company, which at the simplest level has a "Trial" and "Paid Version" two-column matrix. This is nothing to get worked up over -- it is a fundamental fact of our industry. We charge money for value, and value exceeds marginal cost by a stupendous amount. I'm sick of dealing with marketing weasel feature matrices This line would be funnier if there were an ironic marker or perhaps some indication that it was self-deprecating humor. As it is, it sort of sounds like you mean what you're saying. Which would be... interesting in light of your own business model, announced like two days ago. http://www.stackexchange.com/ http://www.stackexchange.com/

shin_lao 17y ago

I sincerely think the aim of his posts is to please his audience, get attention. The posts are more and more noisy, pointless and irrelevant. It looks as if he's forcing to write an entry regularly, even when he's got nothing to say. You can always sum up a post as "X is very bad except when it's not" or "Y is very good except when it's not".