Why do you pay for PLC programming software?

J

Jeremy Pollard

To the last 2 posts... you get what you pay for!! No question... and please don't forget that free software supports the sale of 'MY' hardware... be careful... no disrespect to the freebies out there... but you do it for a reason!

I worked for an Industrial software vendor in the late 80's. Microsoft has sold more software In the time it has taken me to type this message (even with 9 fingers!! - right Walt!!!) than the leading HMI vendor sold in the whole year!!!!!

That’s why... and by the way the support burden of the industrial guys is painful... seems that if someone pays 3000 bucks for software they are entitled to a 10 hour phone call...

Really!!!! Its about economies of scale... and function. Whatever you use - pay it... and be happy about it.

Wanna go back to the days of sealed terminal keyboards, cassette tapes, and no editing???

Sorry had a bad day! :) Happy Thirstday to all...

Cheers from: Jeremy Pollard, CET The Caring Canuckian! www[.]tsuonline.com

Control Design www[.]controldesign.com Manufacturing Automation www[.]automationmag.com
 
N
Michael,
I agree with the bulk of your argument. However:

1. I don't think the "price would plummet" if "everyone stopped buying" software that doesn't have suitable substitutes (MS Windows & RSLogix). Sure MS and AB would make a lot less money, but consider that selling *already developed* software represents a nearly vertical supply curve (since, as you pointed out, the incremental production cost is nearly zero).

<clip>
>NOW FOR THE KILLER REVELATION
>
>Fudge these numbers around any way you
>want, but the truth is that the
>invisible hand of the market sets the
>price. If everyone stopped buying
>Logix, the price would plummet, just
>like the companies who "give it away
>for free." If everyone stopped buying
>Windows the price would plummet. For
>both products, once the return crossed
>the threshold where the sales no longer
>offsets the cost to produce the product
>would vanish.

2. Arguments about production costs are not entirely moot - they have a strong impact on the supply curves of substitute goods. The textbook example is jet production or large defense contractors. The market exhibits monopolistic behavior because, in some cases, it's only big enough to support one vendor. To be more concrete, if I could write even a slightly inferior alternative to Windows in my spare time - you'd bet that I could undercut the heck out of Microsoft. But you're right - companies are about making a profit and that has everything to do with supply and demand and little to do with how much they've "invested".

----
Nathan Boeger
http://notanotherindustrialblog.blogspot.com
"Design Simplicity Cures Engineered Complexity"
 
D
I agree totally with all economics of scale arguements, and have been touting it on this list for 10 years.........................

CODB

Cost of Doing Business

Dave Ferguson
 
C
It's even more elementary than that. The reason
AB/Rockwell sells it's software for that much money is that you will pay that much money.

I don't buy the support, upgrade, etc justification. Most of their products could easily be the product of a small software house and in case you hadn't noticed, support is a profit center for these guys.

Every other Windows application has all the same
issues and most have a much more aggressive churn rate.  If they can float the "cost of business" justification for their outrageous pricing, they've got a lot of people fooled. Visit any local ISV and ask them if they would like the business for half the margin.  And others with nowhere near the revenue levels of AB/RS do give the software away and support it free as well.  Let's get real. The cost to replicate a a package is a lot closer to $5.00 than $5000.

Support is billed separately and exquisitely expensive, unless you use it a lot.  If they aren't making scads of money, it's because they aren't efficient enough to be in today's software business.

Regards
cww
 
M

Michael Griffin

In reply to Michael Batchelor: I don't want to express an opinion on whether AB should sell RSLogix for less money, but I think some of your comparisons are a bit off.

I will leave your example of Microsoft Windows aside, because it doesn't really fit the sales model for PLC software. Microsoft sells very few copies of MS Windows to individual purchasers. Most of their sales are to a handful of large PC OEMS (HP, Dell, Lenovo, Acer, etc.) or volume licenses to large corporations. I could of course take the opportunity to point out Microsoft's 90% profit margin on MS Windows, and how they achieve this despite their notoriously vast and ineffectual bureaucracy, but that would be beside the point.

For small sales volume boxed copy software (which is a better comparison to PLC programming software), the numbers that I have seen are that typically about 70% of costs are sales and marketting. The other 30% is split evenly between development (writing software) and general overhead (paying the rent, managers, bean counters, HR people, etc.). Development costs usually include licenses for third party libraries, development software, third party copy protection software royalties, development hardware, etc., so that "development" share isn't all just programmer salaries.

For speciality software that sold in the $100 range, distributor mark-up was typically about 50%. That's just for putting the software on a shelf and selling it. For $2000 software, the size of the mark-up is going to depend upon what is expected of the distributor in terms of sales effort and initial support.

Compare this to just writing the software and putting it up on a web server for download. Sales and marketting costs - zero. Physical packaging costs - zero. Distribution costs - negligible. Copy protection and license enforcement costs - zero.

So, when you are selling software, it turns out that in the typical case most of your costs arise from the things you have to do to sell the software, not the things you have to do to write the software. The PLC companies that give their software away probably aren't losing as much money at it as you may think. Not charging for software means they have avoided a lot of the costs in the first place. Some companies in other industries (outside of automation) have in fact found it to be cheaper to give the software away than to sell it.
 
D
I am confused...............are there 7 61131-3 languages. I was under the assumption there were only 5.

Just curious.

Dave Ferguson
 
D
They can simply justify it on the basis of demand and volume.

Microsoft can spread their costs over 10,000 times more customers. I am sure if you can guarantee Rockwell the same number of customers as Microsoft has, they will match any and all prices you quoted.

One is an Operating system on most (no bashing) computers and the other is a specialized software for a specialized industry.

Dave Ferguson
 
M

Michael Griffin

In reply to Nathan Boeger: Plenty of people have written better operating systems than Microsoft for less money. Having a better product and selling for less doesn't do them much good though, because Microsoft controls the major distribution channels on OEM PCs. If a PC OEM offers a software product which completes with one of Microsoft's, they lose their MS Windows co-marketing discounts.

How it works is that a PC OEM pays 'x' per copy of MS Windows. That price is high enough that they can't compete with other PC OEMs. If however they meet certain criteria, Microsoft refunds a portion of 'x', effectively giving them a lower price. If however they don't meet Microsoft's criteria, then they don't get the refund. They then either have to swallow the price differential (which is not easy on their thin margins), or charge more money for their PCs (and so lose sales).

Some of the things that PC vendors are *not* allowed to do are:

1) Sell the same hardware offering both MS Windows and a competing OS.

2) Sell similar hardware with a competing OS at a lower price. What they have to do is either just charge more, or else bundle that PC with additional hardware which raises its effective price.

3) Sell the hardware with the price of MS Windows broken out as a line item, or sell the hardware with MS Windows as an extra cost item. (Although in some countries PC vendors have to offer this due to local laws).

Some of the major PC vendors have recently been seeing how far they can push things and are offering things like Linux on some models. A lot of the PC OEMs have been burned pretty badly by the MS Vista fiasco, and are starting to flex their muscles. Things haven't gone far enough though for Microsoft to push the big red "nuclear war" button *yet*.

Apple gets away with it with OS/X because they sell it on their own hardware through their own distribution channels. Server sales are also different, because Microsoft has only ever had a minor position on servers and so just doesn't have that kind of leverage in that market.

So, to sell your hypothetical OS, you would either need to establish your own hardware and distribution channels (like Apple), or sell to people willing to build their own PCs. The first option is not that easy. The second option is probably less easy considering that most people who are willing to build their own PC hardware would rather just put Linux or BSD or OpenSolaris on it. Your third option would be to sell to people who are willing to buy a PC from an OEM and then install your OS on it, and so effectively paying for a copy of MS Windows *plus* a copy of your OS.

The point of the above is that having a better or a cheaper product is often not enough by itself to be successful. You have to have some means of getting it to customers. If one or more established vendors control the distribution channels, or control some other "toll gate", then your product would have to be vastly superior to overcome those barriers.

In the automation industry, the "toll gates" are network protocols and programming software interfaces. This is why the big automation vendors want to control these things. With CAD software, its the drawing file formats, which is why AutoCAD wants to control the DWG format.
 
The sad thing is that should any other PLC technology start emerging it will probably be gobbled up by one of the big companies where the same sales tactics and support tactics will be applied.
 
I think we should look through the 'win-win' perspective.

If any PLC software redounds me, I can happily pay for it.

Also it should be nice if all PLC vendors document and open their any communication protocols to permit their customers to build their own software. This would be a better business model.

For example, OMRON is my favorite vendor with its documentation, I can develop my own ActiveX controls instead of using vendor's components. When my customers require simple applications, I don't pay for a huge software with unnecessary specialties for my project.

Also I have developed a freeware ethernet communication component for OMRON, and publishing it in my site. (http://indanotes.blogspot.com/2008/11/indafins-omron-fins-ocx.html) I believe that this not harms OMRON, encourages their customers to buy OMRON hardware for their low cost projects.

I think the best way is publishing detailed documentation.
 
W
Lee,

This sounds more like a justification for your position as a programmer. I was wondering how you feel about buying a car but having to spend a 1000 dollars for the dealer to provide the software to be able to drive it off the lot? AND on top of that if you want to use the car next year, you have to buy the upgrade or user's license? You mention that the hardware is useless without the software and I agree, but since the software is useless without the hardware it's hardly an argument with merit. The software should be included in the cost of the machine, and the only thing that should cost is upgrades that make the hardware more efficient.

Wayne
 
The answer is quite simple. From the product point of view you can't
split a PLC system into a hardware and software part. Both individual
parts are useless without the other. The development costs of the
hardware of a PLC is only a fraction of the development costs of the
software, but both are defining the price of a PLC system.
If you buy a PLC system you are buying the whole system and not useless parts of it.

Why doesn't produce e.g. A-B the core of their PLC hardware in e.g.
China or anywhere else??

Their PLC hardware is the natural and best dongel for their PLC
software! And there are a lot of such 'dongels' out there :)
That's the reality ...

Best Regards
Armin Steinhoff
 
R

Roland Clayton

Just buy it. If you want your bugs fixing, the software testing and updating, buy it. Free software is out of control.

Stay in control
 
C
<Just buy it. If you want your bugs fixing, the software testing and updating, buy it. Free software is out of control. Stay in control.>

That's an interesting point of view from someone who uses Windows. :^)
 
Isn't this just the dumbest argument ever.

When you write a program for a PLC or DCS or setup a SCADA system or commission VFD do you expect the customer to PAY you for your skill and your time?

It doesn't matter what skills anyone has or how much experience we all expect to get paid. It will not surprise me if the clowns who started this are the same clowns responsible for the stuff ups the rest of us have to fix.

Have any of us ever heard a good competant programmer complain about the cost of software, the way some of these clowns have? If your good enough to earn a living programming then you should have enough to pay for the software.
 
Hear, hear - I just bought a microprocessor for $3.75, and the compiler costs $1200. So what? Basic cost of being in the game. Get used to it!

Hugo
 
C
Another interesting point of view. It would have a lot more traction if a very large part of this forum weren't about very expensive software stuff ups that can't be fixed by you or me and won't be fixed by the "clowns" who wrote them. And it's "protected" by one sided licenses that absolve them of any and all responsibility, yet prohibit the user from doing anything besides attempting to use them.

What other product can you think of that gets that kind of legal freedom, even to the point that you are prohibited from publishing a review to warn others?

OSS isn't all about cost. I and many others would gladly pay prevailing prices for a product that can be fixed or changed to
meet unique needs. Or pay for support that actually attempts to solve problems with the software. For software that you actually own and can use as you will. Please tell me, honestly now, which model is unreasonable?

The current status quo is an extremely anti consumer model, possibly the worst example of corruption in a free market, where government enforces the unilateral interest of industry against the interests of consumers. Think about it, compare it to any other product. It would more properly be the policy of a totalitarian regime than a modern democracy, but money talks and this is a singular example of _no_ consumer protection allowed.

It is ridiculous to defend it with any argument that pertains to fairness. Especially yours. No one here has lost a dime to people who want to produce and distribute software more in the public interest. Those who do are free to compete fairly.

Regards
cww
 
Curt: You're arguing with people who claim that anything that is free is worthless. And they are offering their opinion to you for free. You can take that for what it's worth.

If anyone wants to pay me $1200 for this opinion, I'll gladly accept your money. If you have any doubts about the value of this opinion, then I'll offer to double the price to $2400 just to make it even more valuable. I even offer an annual service contract at a very attractive rate that will keep your opinion up to date.

Don't listen to any opinions that you might see elsewhere. They'll just cost you more money in the end. I have market studies that prove conclusively that this is the only opinion worth having.

Now I'll sit back and see if people are willing to put their money where their mouth (or rather, my wallet) is. Believe me, I worked very hard on this opinion, so I deserve your money.
 
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