I remember the day like it was yesterday. Pac Man had finally arrived on the Atari 2600.  It was a clear and sunny day, but it was slightly brisk. My dad drove us down to the video store about three miles from our Michigan house. If I remember correctly, the price for the game was $24.99.  It was quite expensive for the day, probably equaling a $70 game in today’s market, but it was mine. There *was* no question about it. If you purchase a game, it’s your game… right?

You couldn’t be more wrong.  With all the licensing agreements in games today, you only purchase the right to play it. You don’t actually “own” the game. 

Today, game designers want total control over the money that comes in for a game. They add in clauses that keep the game from being resold, rented, borrowed, copied, etc. All of the content in the game, including the items you find that are specifically for you, are owned by the software developer. Why, you ask, do they do this? It’s all about the money.

This need for greed started years ago, when people started modifying current games on the market. One of the first games like this was Doom. There were so many third part mods made, but because of licensing agreement, none of these versions were available for resale. The end user, or you, had to purchase Doom before they could even install the mod.  None of these “modders” were allowed to make any money off their creation.

No industry is as global as software development.  Pervasive networking means that software developers can, and do, work from anywhere. This has led many businesses to hiring development subcontractors in other countries, aiming to find good development talent at lower prices, or with fewer hassles on entry into the US.

While this is an ongoing and dynamic equilibrium, there are compelling reasons for doing software development in the United States, or using a hybrid model where some parts of the task are parceled out to foreign contractors and some are handled locally.

Development Methodologies

The primary reason for developing software overseas is cost reduction. The primary argument against overseas software development is slower development cycles. When software still used the "waterfall" industrial process for project management (where everything is budgeted in terms of time at the beginning of the project), offshoring was quite compelling. As more companies emulate Google and Facebook's process of "release early, update often, and refine from user feedback," an increasing premium has been put on software teams that are small enough to be agile (indeed, the development process is called Agile Development), and centralized enough, in terms of time zones, that collaborators can work together. This has made both Google and Facebook leaders in US-based software development, though they both still maintain teams of developers in other countries tasked with specific projects.

Localization For Americans

The United States is still one of the major markets for software development, and projects aimed at American customers needs to meet cultural norms. This applies to any country, not just the U.S. This puts a premium on software developers who aren't just fluent in English, but native speakers, and who understand American culture. While it's possible (and even likely) to make server-side software, and management utilities that can get by with terse, fractured English, anything that's enterprise-facing or consumer-facing requires more work on polish and presentation than is practical using outsourced developers. There is a reason why the leaders in software User Interface development are all US-based companies, and that's because consumer-focused design is still an overwhelming US advantage.

Ongoing Concerns

The primary concern for American software development is talent production. The US secondary education system produces a much smaller percentage of students with a solid math and engineering background, and while US universities lead the world in their computer science and engineering curricula, slightly under half of all of those graduates are from foreign countries, because American students don't take the course loads needed to succeed in them. Software development companies in the United States are deeply concerned about getting enough engineers and programmers out of the US university system. Some, such as Google, are trying to get programmers hooked on logical problem solving at a young age, with the Summer of Code programs. Others, like Microsoft, offer scholarships for computer science degrees.

Overall, the changes in project management methodologies mean that the US is the current leader in software development, and so long as the primary market for software remains English and American-centric, that's going to remain true. That trend is far from guaranteed, and in the world of software, things can change quickly.

Let’s face it, fad or not, companies are starting to ask themselves how they could possibly use machine learning and AI technologies in their organization. Many are being lured by the promise of profits by discovering winning patterns with algorithms that will enable solid predictions… The reality is that most technology and business professionals do not have sufficient understanding of how machine learning works and where it can be applied.  For a lot of firms, the focus still tends to be on small-scale changes instead of focusing on what really matters…tackling their approach to machine learning.

In the recent Wall Street Journal article, Machine Learning at Scale Remains Elusive for Many Firms, Steven Norton captures interesting comments from the industry’s data science experts. In the article, he quotes panelists from the MIT Digital Economy Conference in NYC, on businesses current practices with AI and machine learning. All agree on the fact that, for all the talk of Machine Learning and AI’s potential in the enterprise, many firms aren’t yet equipped to take advantage of it fully.

Panelist,  Michael Chui, partner at McKinsey Global Institute states that “If a company just mechanically says OK, I’ll automate this little activity here and this little activity there, rather than re-thinking the entire process and how it can be enabled by technology, they usually get very little value out of it. “Few companies have deployed these technologies in a core business process or at scale.”

Panelist, Hilary Mason, general manager at Cloudera Inc., had this to say, “With very few exceptions, every company we work with wants to start with a cost-savings application of automation.” “Most organizations are not set up to do this well.”

The innovators in technology have long paved the way for greater social advancement. No one can dispute the fact that the impact of Bill Gates and Microsoft will be far reaching for many years to come. The question is whether or not Microsoft will be able to adapt and thrive in emerging markets. The fact that Microsoft enjoys four decades of establishment also makes it difficult to make major changes without alienating the 1.5 billion Windows users.

This was apparent with the release of Windows 8. Windows users had come to expect a certain amount of consistency from their applications. The Metro tile, touch screen interface left a lot to be desired for enough people that Microsoft eventually more thoroughly implemented an older desktop view minus a traditional Start menu.

The app focused Windows 8 was supposed to be a step towards a greater integration of Cloud technology. In recent years, Microsoft lagged behind its competitors in getting established in new technologies. That includes the billions of dollars the emerging mobile market offered and Cloud computing.

Amazon was the first powerhouse to really establish themselves in the Cloud technology market. Google, Microsoft, and smaller parties are all playing catch up to take a piece of the Cloud pie. More and more businesses are embracing Cloud technology as a way to minimize their equipment and software expenses. While it does take a bit for older businesses to get onboard with such a change, start ups are looking at Cloud computing as an essential part of their business.

But what does that mean for Microsoft? Decisions were made to help update the four decade old Microsoft to the "always on" world we currently live in. Instead of operating in project "silos", different departments were brought together under more generalized headings where they could work closer with one another. Electronic delivery of software, including through Cloud tech, puts Microsoft in the position of needing to meet a pace that is very different from Gates’ early days.

The seriousness of their desire to compete with the likes of Amazon is their pricing matching on Cloud infrastructure services. Microsoft is not a company that has traditionally offered price cuts to compete with others. The fact that they have greatly reduced rates on getting infrastructure set up paves the way for more business users of their Cloud-based apps like Microsoft Office. Inexpensive solutions and free applications open the doors for Microsoft to initiate more sales of other products to their clients.

Former CEO Steve Ballmer recognized there was a need for Microsoft to change directions to remain competitive. In February 2014, he stepped down as CEO stating that the CEO needed to be there through all stages of Microsoft's transition in these more competitive markets. And the former role of his chosen successor, Mr. Satya Nadella? Head of Microsoft's Cloud services division.

Microsoft may not always catch the initial burst of a new development in their space; but they regularly adapt and drive forward. The leadership of Microsoft is clearly thinking forward in what they want to accomplish as sales of PCs have stayed on a continuous decline. It should come as no surprise that Microsoft will embrace this new direction and push towards a greater market share against the likes of Amazon and Google.

Related:

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