International Product Life Cycle for Software

I was surprised to learn how many executives do not understand international product life cycle as it applies to software products. This short description is intended to describe international product life cycle in an abreviated fashion and then discuss how software's portability make it a unique case which promotes more rapid off shoring.

First, international product life cycle states that innovation starts in a home developed country and becomes successful as a product. Then it competes in other developed countries with products from within these countries. As the technology matures, it moves into the developing world by means of export. Then the developing world starts manufacturing for home use and eventually manufactures and sells back into the developed countries.

There are many examples of this. It transpires because of the dynamics of the theory of comparitive advantage as it occurs over time.

For software, the twists are the following:

a) It is much easier to move production off shore to reduce costs associated with add ons. For this reason this happens relatively early.

b) Because the knowledge associated with developing add on products and services allows the developing country to develop the same or better skllls as the parent, often the entire product or idea can be copied to provide a much lower cost version off shore sooner rather than later. If the product enhancement is done as a branch of the parent company, IP is protected. If the enhancement is done to an outsourcing company, it is very likely that the company is creating a vehicle to copy it's product.

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Disruption of Microprocessors by Microcontrollers and Its Long Term Effects

I was fascinated to discover that the mpu vendors were being disrupted by mcu vendors by virtue of the fact that the increase in functionality of the parts and free memory is leading to ever expanding features, features that users don't necessarily need for many applications.

As Christianson predicts with the Innovators Dilema model, microcontrollers came in on the low end and started competing on a new parameter - system on a chip solutions. Ten years ago they could run a few assembler instructions. Today they can put enough memory on the processors to compete with mpu and board level solutions of 10 years ago. They are currently capturing this business.

Microcontrollers are gaining ground because mcu technology is being commoditized into consumer goods which are sold in very high volumes. This high volume is pushing prices down and microcontrollers are a natural solution. BOM costs can drop by substantial amounts resulting in a big improvement in profitability for the OEMs.

Too cool.... theory meets practice....

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