Why do you pay for PLC programming software?

L

Lynn at Alist

Maybe the printer, electric toothbrush, and video-gaming markets are "different", but this flys in the face of what works there.

In all of these other markets, the best strategy has proven to give the core product way at near cost (or a loss) and then reap the profits on the "complements". To follow this model, the PLC vendors should make the PLC very cheap (ie: a MicroLogix 1000 for $99) and then expect to profit from the cables and programming software.

When Nintendo dropped the price of the GameCube from $149 to $99 they had a near 40% increase in volume immediately. Games still sell for $29-49 each. Sony & XBox grumble Nintendo must be lossing money on every console sold, but guess what ... ;^)

- LynnL
 
M

Michael Griffin

On January 9, 2004, Lynn at Alist wrote:
<clip>
> In all of these other markets, the best strategy has proven to give the
> core product way at near cost (or a loss) and then reap the profits on
> the "complements". <

I think the term "core" product is a bit misleading. The "core" product is the one which makes money. The one you want to give away is the one which gets your foot in the door. The product you want to make money on is the one which you will sell repeatedly after you have established your market.

> To follow this model, the PLC vendors should make the
> PLC very cheap (ie: a MicroLogix 1000 for $99) and then expect to profit
> from the cables and programming software. <

No, you would sell the software and cables cheap, and make money on the PLC CPUs and I/O. You get someone to learn how to use your software, and hope this encourages them to try out your PLCs. This in fact seems to be exactly the strategey of some smaller PLC companies. Even the major companies will sometimes do this as an "introductory offer".

Setting a high price on the software creates an initial entry barrier. In setting a high price you are asking the customer to assume all the risk (i.e. they may not like your PLC once they try it).

If you charge a high price for your software, your PLC must either be very low risk (already be well known to the customer), or there must be a reasonable chance that it is technically superior or financially cheaper to the alternatives by a very large margin. PLC technology is fairly mature, so there isn't much room for technical advantage. Shifting the costs to a later point in time (when the customer is buying more PLCs) may make sense once you take risk into account.

> When Nintendo dropped the price of the GameCube from $149 to $99 they
> had a near 40% increase in volume immediately. Games still sell for
> $29-49 each. Sony & XBox grumble Nintendo must be lossing money on every
> console sold, but guess what ... ;^)
<clip>

Standard practice in the video console business has always been to lose money on the consoles and make it up on the games (including royalties on third party games). Typically, they need to sell 4 to 6 games per console sold to break even. Microsoft loses money on each XBox console sold, and so far they're not making it up on the games (which is why their games division has been losing so much money). Sony is believed to be breaking even on their console, as their hardware is better designed for manufacture than Microsoft's XBox (which is really just a low end PC with a crippled version of Windows 2000).

The problem in the games console business is the same chicken and egg problem I outlined above with PLCs. If you charged a high price for the console, you would have tough sell whenever you brought out a new model. You would be
asking the customer to assume all the risks of whether they will like it and whether there will ever be enough good games for it to make having the console worth while. Instead, the manufacturer assumes some of the risk by
subsidising the console sales and deferring their profits until the customer buys enough complements (games).

--

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Michael Griffin
London, Ont. Canada
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T
I believe that the answer may be more simple than most people think. The plc manufactures want to make profit on hardware because they are not always the ones doing the programming. I work at a control systems house in Beaumont, TX. I have noticed over the years with our local industry that they tend purchase their plc hardware from a vendor, but have their programming done either internally or by a systems intergrator. We sell both hardware and programming services, but the two don't always go "hand in hand". Today, it seems, everything is about profit. Plc manufactures want to make a profit by selling hardware and systems houses want to make a profit by programming. So in the end it is the end-user that usually has to pay for both.

Troy Gallier
Scallon Controls
[email protected]
 
Actually, I think the explanation is even simpler. The PLC manufacturers have to recoup their substantial software development costs one way or another. The can
either sell or lease the software outright (leasing can give the end user a lower initial cost as well as provide a revenue stream to pay for support). Alternatively, they can factor it in to the cost of the hardware. But this doesn't make the volume buyers very happy. If I buy 1000 units, why should I pay 1000 times the programming costs a single unit buyer buys?

So the vendor has to choose who to make happy, and how. (Of course, this follows the "maximum profit" rule).

But it's us little guys who feel the sting, when we have just the one job (or worse, are called in to fix or enhance an existing system, and don't own the programming software already). I feel your pain. It seems everything costs money these days. (You know they've been working on how to collect so-called "micropayments" for internet software and services. Prehaps one day there will be a charge for each keystroke and/or mouse click)

Rufus
 
M
If you were to buy enough hardware at one time I am sure AB would give you the software. Of course, if you had a group of programmers developing a set of programming tools, help files, providing techincal support - would you want to be paid for it? Yes, it is about profit, isn't that what we all do, provide a service or function for profit? Of course you don't have to buy their software, just pay someone else to do it for you. The last VAR I worked for got their AB and Moscad programming tools for free, they sold a lot of harware, they also got very good deals on the IFix packages as well - because they sold a lot of systems. I don't know about you, but the investment is cheap compared to the cost of having someone else do the work for you and then not be around to support it. Plus, having the software in house gives you another service to sell to your customers and makes you a more rounded field engineer.

Matthew Hyatt
Technical Consultants
[email protected]
 
Take all the letters of the English alphabet. Assign each letter to its position times 6 to create a simple code where A=6, B=12, and so on. Look at the words "Computer" and "Allen-Bradley" and substitute these values for the letters. Add up the values and what do you get?

666

Kinda spooky to think that now I spend half my work time programming Allen-Bradley computers!

It kind of makes sense too... the computer, after all, is the ultimate indulgence of the original sin... eating of the fruit of the tree of knowledge... oh no... my PLC5/80 just became self-aware...

P.C.
:)
 
C

Concept is not good software, and certai

> James
>
> I am dismayed at your thinking here. It costs considerably more to develop good software than it does automation hardware. In representing Schneider Electric and our programming software, perhaps you would prefer us to add this cost to the price of the hardware? <

I am forced to use your Concept software, and it is certainly overpriced. I'm amazed at so many shortcomings in this software, and am flabbergasted that it is unable to view variables and binaries at the same time. Please don't brag about a product that cost so much to develop, but is still such an inferior product.

I understand it is expensive to develop software, and I've been biting the bullet for years over the cost to interface. I agree this cost has to be passed along, and it would be impossible to do this on the hardware end. This would skyrocket costs. It would be nice though to see a lower cost.

It's like the old adage, "I'm proud to be a tax paying American, but I'd be even more proud to pay half as much if those good old boys in charge could be more efficient."

> I am sure you would not go for this suggestion. Like it or not, automation company's are evolving into software vendors..... This is the facilitator for what hardware is able to do. Without it hardware is inate.
>
> We are all in business and consumers in the majority now accept that software is a piece of the automation solution. My suggestion....Get with the program and understand the value of the tool that is now esential to an automation system <

Please! Modicon needs to get with the program.
 
B

Brian E Boothe

I've Seen this subject over and over, and what exactly is the point that your trying to make with this statement? For usefull Usable Software in the PLC industry u PAY for it, there is no AD-HOCing it together,

Explain you debate??
 
H
Needless to say, I'd rather not pay anything for development software. However, as a PLC systems developer I look at the cost of this software as a tool to do business. For us it doesn't really matter since one software package will be used to develop many projects. I am sorry for the small manufacuterers with a few PLC systems and a large engineering staff who have to buy multiple copies and site licenses to satisfy their needs. Large manufacturers with systems numbering into the hundreds do not have the same problem of scale. Like I mentioned before, the development software is a tool like any other and the tool's manufacturer is entitled to set his own prices. In free market socienty, if a product's price is outrageous, a competing product will eventually emerge.

Hans Halpern, Anik Systems
 
C
Until there are viable alternatives, what choice do you have?
But, if companies and individuals were willing to invest just a very small amount of "sweat equity" into a shared solution you would have the option of using the sum of these investments at no further charge. Even though many seem to grasp the benefits of partnering with other firms, there is little recognition that many together can do almost anything with honest cooperation.
OSS provides the framework with the GPL to make this workable without fear of exploitation or other downside. You give a little and get a lot and open vast opportunities for code and experience sharing. All on the non competitive areas of your solutions. The status quo tends to isolate users so that all are required to reinvent the wheel and solve the same issues and the same information is sold over and over. Skipping this part of being in the automation
business simply has to improve profitability.

Regards
cww

Full Disclosure :^) http://mat.sf.net
 
M
Sweat equity is great if your looking to get back something for your effort, kind of like starting a buisness, everyone puts in long hours, works for peanuts, the brass ring comes when sell the business or do an IPO, I have yet to meet someone who does it for no ROI. I don't know anyone who works for free, if they do, they don't need to work in the firstr place. Unless your suggesting that we all volunteer our time to support this open and free program development tool, still by show of hands, how many software developemnt engineers and professionals out there are willing to work for free, say 300 to 500 hours per year for the next 5 years, oh, you get nothing in return, just the satisfaction that you created a development tool worth millions and will not get anything for it, nothing, nada, zip!

The reasons companies charge for this is because they have invested the time and manpower into the development tool. Our entire society and 99% of business' are founded around profit (money) and until this aspect of society changes - money goes away and everything is free, people and business' will charge a fair market value for their services. If you want or need something, ie... a tool, some software, music, a car, food, electricity, well you have to pay for it. You can choose to purchase these things or not.

Bartering is fine, but you still get taxed on the goods and services and from what I have seen, you wind up spending money anyways. Nothing is free, except the air we breath. I don't mind giving time to help others make a better life for themseleves, but I am not into giving away my engineering expertise and consulting services for free. Those are skills I developed with my own sweat equity, now I am reaping the rewards of that hard work and sweat.

MJH

 
Developing software requires time and people and both of them cost money.
Granted, some manufacturers may be overcharging, but they still deserve some
compensation. I guess you do not mind working for free, but when I write
software for a customer I expect to be paid for my services.

 
M
Great Idea - I'm up for it.

As for not getting anything, I would expect that we would wrest some control of the industry and point it in the direction we want.

Most of the work has already been done, There are ladder and SFC editors already out there, add to this the comms already reverse engineered, all that is needed are plc specific compilers and we'd have it. Then the PLC manufacturers could compete on the quality of their equipment, rather than 'a locked in user base' with expensive software and experience of specific programs.

--
Marc Sinclair
http://www.germainesystems.co.uk
 
C
Yes, that's the prevailing view. But I don't understand the no ROI part. If you recover the total cost of partnering with an AB or a Siemens, for example, and recognize that even the part of the cost your customer pays for directly could go to your bottom line, it would
seem like a fairly good ROI, especially with today's margins. And if done as a project for your company, I assume you would be paid. I don't understand this recurring "work for free" part. As it is, you get paid for your hours, any millions it's worth typically belong to the company. If the company invests effort in OSS, it really doesn't change anything except their bottom line.

Now, if you contribute on your own time, as many do, no $ ROI might be true. But some of us enjoy it more than say, Golf. But the real value of these platforms would be to the small and medium size companies and if they get together and share a little of their talent, the payback is far more tangible.

Regards

cww
 
C
If your company invested in OSS and put you on the project would that square things? No one has suggested that the automation work for customers would be free. Suppose you had a "Software PLC" that belonged to your company that you could deploy on commodity hardware at no cost. Wouldn't projects using that potentially make more money for them and perhaps you? And wouldn't you be in a good position to really know it and support it? There are ways to do this where no one goes without. You really don't make money on the vendor's part of the equation, they do.
Right now, the vendors exist on the fact that rolling your own is not very economic for most shops. Not all, our hosts and I, in particular, find it doable at least. But most shops can't or won't so they pay up. But if you spread the cost of a solution amongst enough shops, it soon becomes more economic than buying the usual fare. So, you can use it to provide solutions in the normal fashion, except that you actually own it, can know everything about it, can fix it and can even improve it if desired. And you can't be forced to upgrade or be declared obsolescent or denied support or other BS like that. At that point it becomes much cheaper for you and your customers. Since it's based on Linux which shares the same attributes, is simply eliminates much of what is bad about the status quo. It would certainly have some problems, but now you have far greater control over how, when, and if you deal with them. Sounds like a good deal to me.

None of this involves working for free if the shops each take a tiny risk and invest a small amount for their future. And the collective smarts and experience in the trenches are far greater than any one company can point at developing a solution.

Now where am I thinking wrong?

Regards

cww
 
B

Brian E Boothe

Heck with that, I'd like to make more as a developer at $11.75. all programmers get the same rate, hell I know more than all of them. Including VC++ /VB/VBA Borland C++ Etc. etc. i'm sick of this.

I'm prob looking for a new job.
 
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