Fog Creek Software
Discussion Board

Products vs just Services...

I was reading an article at
where the author says that a company can survive on services alone.

Well, I am not convinced.

The same author, in a later article while talking about the current recession, says:

"You have to know that you cannot be just a bundle of technical skills. There is more to life than writing code. The world needs solutions, not software and it will take time to master that. You just cannot be tactical with your own life – sooner or later, it will all catch up. That is beginning to happen. You did not need a recession or a Bin Laden to drive home that point. That is the way it works in the medical profession, in public life, in journalism, in teaching primary school children. We cannot be an exception."

Once again I don't get it.

Arun R
Friday, October 19, 2001

Survive?  Sure.  There's always a market for services.  Contrast this to products, where many of the good ideas have already been implemented at least once before.  The only hope for a products company is to distinguish itself in a saturated market by creating a superior product -- which is hard to do if your competitors are large companies which have already been in the business for years, or are open-source projects written by dedicated volunteers and sponsoring corporations and offered to the world with free distribution.  The good thing about products is that, unlike services, they do scale up.  Services companies are fated to always be small companies.  When you do products, your risk is higher, but so also is your rate of return.

Right now I am working for a services company that is trying to reposition itself as a products company, which I suspect is a fundamentally flawed goal.  Writing products is HARD.  It takes years.  It takes discipline -- a discipline a company like mine is not used to.  My company is well adapted to writing one-off solutions with small team sizes and project lengths between three months and a year.  Traditionally it's made a lot of money doing this.  But it does not lend itself to the entire company focussing on a single project with multiple releases over long time period It doesn't see QA as an integral part of the development process -- QA is just something you tack on the end of a project as a safeguard against releasing egregious bugs to the customer.  And if a project fails -- better luck next time.  A services company can survive operating this way, but deciding to do products is a bet-the-company decision.

So there's a place for products companies and services companies, the question is just which one you want to be ...

Friday, October 19, 2001

*  Recent Topics

*  Fog Creek Home