Sofducts (ugh) and Value Creation

If you’re in dire need of neologisms to throw around, this article has you covered: it features Slabs, Sofducts and Bespoke Objects. Some good thinking in there, especially regarding Sofducts, a terrible term referring to software / product hybrids:

For example, GPS navigation systems have been sold in a box, physically shipped, with a warranty card and customer service phone number. Now, the sofduct version gives you the exact same functionality but is downloaded and runs on a slab as a piece of software. To the user, the end result looks and feels just like the traditional physical product. The sofduct is very disruptive in this way.

Which reminded me of something i read in an article by Timothy B. Lee about The Great Ephemeralization:

Google waved a magic wand that transformed millions of Android phones into sophisticated navigation devices with turn-by-turn directions. This was functionality that people had previously paid hundreds of dollars for in stand-alone devices. Now it’s just another feature that comes with every Android phone, and the cost of Android phones hasn’t gone up. I haven’t checked, but I bet that this wealth creation was not reflected in GDP statistics. And it’s actually worse than that: as people stop buying stand-alone GPS devices, Google’s innovation will actually show up in the statistics as a reduction in GDP.

And also:

Every time the software industry displaces a special purpose device, our standard of living improves but measured GDP falls. If what you care about is government revenue, this point might not matter much—it’s hard to tax something if no one’s paying for it. But the real lesson here may not be that the American economy is stagnating, but rather that the government is bad at measuring improvements in our standard of living that come from the software industry.

Which strikes me as an interesting thought.

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