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Software as a Fixed-Cost Business

Charles Phillips said this during his keynote at Oracle OpenWorld 2008.  He continued to say that (my paraphrasing) a software business needs to achieve largest market share; the bigger you’re in software, the more likely you’d win. 

Profit = Volume * (Price – VariableCosts) – FixedCosts

Goal is to turn variable costs into noise, and focus on investment in R&D (and marketing).  As long as there are markets for the products, keep investing in engineering.  This idea reflects Oracle‘s strategy to be “Complete”, “Open”, and “Integrated”, as well as its many acquisitions.  

Copyright (c) 2008 by Waiming Mok

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