End of Software, The: Finding Security, Flexibility, and Profit in the On Demand Future

But I'm an Investor

An investor might ask, “All this service is good, but where are the margins in the business?” The services business has traditionally been a low-margin business with expectations that service companies will have 10% pretax margins as compared to the 30%–40% margins of a software company. This, of course, has driven services businesses to look at lower cost delivery models—hence, the move to offshore outsourcing. But at some point, the key to high margins (or product margins) cannot lie in just reducing the labor component. You can clearly see this in the home construction business. New home construction is dominated by prefabrication and onsite assembly of a fixed number of floor plans in large, multihome developments. Custom ...