News.com reports on the comments by Ray Lane (Kleiner Perkins) at the Software 2004 conference:
The software industry can no longer expect “the entire world around (software) to change to make it work,” Ray Lane said.
Instead, companies must learn to sell software as a service, fulfilling customer needs to grow and shrink very quickly, said Lane.
Lane outlined a software future strikingly different from the past, in which proprietary technology sold at high price points. “This industry has arrived at a watershed,” he told the audience of software executives and investors.
The software industry was created by a series of what Lane called “tectonic events,” including the microprocessor, PC and Internet. “The likelihood is there will be another one of these events,” he said. “I don’t know what it will be, but in between we need to work on all the little things that make the last big thing work–the Internet.”
Another message Lane delivered was that globalization is here to stay. He said he was impressed by a recent visit to India. “I went over thinking it was a black box–you send work over, and it comes back to you. What I found was innovation, work ethic and incredible skills,” he said.
The open-source movement has also hastened the service-centric model of software by making it easier to swap out functional components, Lane said. “If you’re starting a software business today, I suggest you go to a service model.” New companies can be “pure” in their approach to business, he added, “because we haven’t built up all this stuff around them yet.”
Lane said Silicon Valley can use the current “period of normalcy in which we’ve finally become part of the rest of the world” to listen to its customers and give them what they want. “If we think about software as a service business this will again be the largest industry on earth.”