Software vs Physical Products

April 20, 2020

The word 'product' now refers to software rather than physical products.

The limitations with physical products are numerous : manufacturing, shipping, return, maintenance.

In software many of these limitations do not exist.

The value of a software product is much more subtle/psychological than a physical one. It builds value over time.

Think of Google Maps for instance. The idea of finding a location is simple and could be accomplished with a physical map.

But Google Maps can be updated/upgraded over time. It can be personalized to the user. It collects data and gets smarter over time. It collects feedback. We end up using it daily. It can be worked on by 100's of engineers and designers at once.

The value of software (like Social Networks) is less obvious then a beautifully designed BMW.

It doesn't have immediate sensual value. But as we upload photos and see our friends posting over time we become dependent on it.

Whereas a physical product has a 'fixed state', a software product is constantly changing.

The limitations of manufacturing require that a physical product be designed once and in detail - in terms of engineering, tooling.

Versions of software can be updated in seconds and pushed to thousands/millions of users

So what are the disadvantages to software products?

It is easier to copy/replicate (hard to patent).

It does not have the sensual//emotional appeal of physical products.

It requires a larger scale of customers to be profitable.

It requires a different means of marketing and sales.