Why Software Is Eating the World? 🌎

(https://a16z.com/2011/08/20/why-software-is-eating-the-world/)

“Software is eating much of the value chain of Industries“

This article is written down by Marc Andreessen who is a co-founder and general partner at the venture capital firm Andreessen Horowitz. He holds a BE in Computer Science from the University of Illinois at Urbana Champaign.

So in this article (why software is eating the world) which was published in 2011, he had explained some points why Software is important in every industry.

Andreessen stated that after the 1990’s dot com bubble one of the biggest market crash in the ’90s), many new software companies were in controversy in Silicon Valley. Also, their IPO’s were a great success in the market. So the people started stating that “isn’t this just a dangerous new bubble?”

The author arguing on this states that “today’s stock market hates the technologies, by showing them the price/earnings ratio of a few software and technology companies which have a P/E ratio around 15-16 after being such a profitable company”. He stated that many big companies are being run on the software’s and providing online assistance as a service. And he states that in the coming next 10 years he expects many more industries who will complete work on software. And yes he was right.

He explains why and how the software and computer industry started to boom. He said we have completed six decades in computers, four decades since the microprocessor, two decades in the rise of heavy internet broadband and piling up all this we have finally now got a complete usage of the software in different industries. Later on, he explains how these expensive cloud software’s started getting cheaper in rate. An example from the article ( in 2000 the cost of a customer running an application through LoudCloud was $150,000 monthly and later on running the same application through Amazon’s cloud costs around only $1500 monthly. So it shows how cheap it is from the LoudCloud.)

Different examples of how software companies started beating physical stores using their different software’s:-

We start with the book industry where the amazon took over millions of book stores because of the online book reading facility given by amazon to people, so it becomes very easy to their consumers to read books anywhere through their Pc’s or mobile phones.

Nowadays People use different music application where people can hear music from their mobile phones or desktops. Like say iPod which people used before to listen to music but nowadays Spotify, prime music are the sources for listening to music. And these applications are used in mobile phones which is much durable than an iPod.

Not only all these industries but the agriculture industry also uses software for satellite analysis of soils as a per-acre. And oil & natural gas companies also use this for data visualization and analysis. As we all know that every financial transaction be it small or a big includes the usage of software, without the software it is impossible to use the credit cards and debit cards.

Andreessen also stated that the Health Care and Education industries are the next transforming industries into software one. And we saw this in Covid-19. His Venture capital firm is also backing aggressively on the startups of these two industries.

Leaving all the industries but the National Defense is also using software’s that provides intelligence, communication, logistics, GPS locations and weapon guidance. Drones are used for launching airstrikes without risking human life. So overall software and technology is used widely in National Defense.

In the end, Andreessen states that “Companies in every industry need to assume that a software revolution is coming.” This also includes the industries which are already software-based. In heavy real-world composition like Gas and Oil, software revolution is an opportunity for the incumbents.  This will also lead to different start up’s in the Silicon Valley and the coming 10 years’s there will be a huge battle between the Incumbents and the software powered insurgents (Joseph Schumpeter, the economist who coined the term “creative destruction,” would be proud.)

He said that many of the big software companies (eBay, Google, Microsoft, Amazon) are of America still we face some problems:-

First of all, every new company which is starting has to face many big players which are already there in the market, but the good news is that once they satisfy the consumers then they cannot be stopped by anyone and they’ll succeed and they will grow faster.

Second is that many people in the U.S. and around the world lack education and skills required for the technologies in new companies coming out of the software revolution. And he shared his experience of working with different software companies that the companies always starve for talent. And this problem is very big because many workers will end up having no job and they will be stranded on the other side and cannot work in that company again.

Once a new company is formed they then focus on customer’s satisfaction and they build strong pillars to get stability in the market.

So in the end he said that instead of questioning the companies let’s focus on the Growth & development in software for the future.

“That’s a big opportunity. I know where I’m putting my money.”
(Here the author is talking about the software companies)

Thanks for Reading!!!