The pendulum and the pits

by Esther Schindler

“If you follow the software industry closely, you are no doubt aware of the current shake out. Two years ago... the software explosion was running wild, with thousands of start-up companies marketing microcomputer software. It was a heady time, and many people thought the sky-rocketing software market would never end.”

That quote is not from current events, reporting about the failure of the dot com economy. It's excerpted from The 1986 Programmer's Market, a publication from Writer's Digest Books that lasted just a few short years. I found my copy a few days ago, and examining the book has reminded me that the more things change, the more they stay the same.

The computer industry is cyclical. The pendulum swings from an emphasis on standards to an encouragement of innovation (which breaks all those standards). The industry embraces the freedom of multiple options, then trashes the idea in favor of the simplicity of supporting one environment. And it does so, over and over again.

With each swing of the pendulum, new opportunities arise and old ones depart. Companies and individuals' acquired wisdom in one arena rarely survives to the next one. The old established vendors check out, and new ones flourish and prosper. New vendors aren't held back by installed customer bases or the board of directors' risk assessment; in most cases, someone has bet the house on the company's success.

If you need proof, contemplate how few Apple // companies survived the transition to Macintosh, and how few DOS companies adjusted to GUI environments like OS/2 or Windows. Few established Windows-centric companies became important to the OS/2 community; we grew our own successes (and failures, too). I'm starting to see the same behavior in the Mac OS X marketplace.

Then the cycle repeats itself, when the Next Big Thing comes along.

If I needed proof, The 1986 Programmer's Market would provide plenty of evidence. The 700 companies listed in the book aren't inclusive of the entire computer industry at that time; Lotus Development Corporation isn't there, for instance. That's because the Programmer's Market was interested only in companies that would accept freelance contributions, or pay programmers on a royalty basis. As just one example, Batteries Included distributed 30 programs, 10 of which were written by freelancers.

The bell tolls

Nonetheless, I think the book is a good snapshot of the market, as of 15 years back. Especially when you contemplate the death toll.

The body count is remarkably high.

Now, I wouldn't expect most companies to survive. I would be surprised if Resort Management Systems, Inc. was still around, especially if their applications ran only on Altos, Onyx, Televideo and Zenix-UNIXS, as was true in 1986. And it's no surprise that The 6502 Program Exchange (which marketed an Apple Assembly Language Development Package—yup, that was its name) is history.

However, this is supposed to be a thriving industry, with plenty of opportunity. Despite the downturn mentioned in the book's preface, 1986 was at the beginning of a huge growth curve for microcomputers.

Yet, very few of the companies listed in the Programmer's Market are still alive and independent today--even if you count a company as "alive" if it was acquired. Remember Paperback Software? Palantir? Lifeboat Associates? Fox & Geller? Major players, all. All gone.

Sure, some of the companies listed in this book made it. Origin sells games, just as it always did (though I doubt they support the Amiga and Atari, these days). RedWing continues to publish agricultural software. Great Plain's accounting applications are still around, even if Great Plains is now a division of Microsoft. Greenleaf's programmer tools weren't acquired by another company until 1990, and apparently you can still buy them.

Most of the survivors staked out a narrow niche and stayed within it. The winners were like rabbits whose fur changed as the computing seasons do: white in the winter, brown in the summer. As the landscape changed, they adjusted... but they never stopped being rabbits. (There's a hare-brained lesson in this, I suppose.)

Some companies that failed--and, without researching all 700 of the businesses listed, I'd estimate that 95% of them are gone—tried to re-invent themselves in new markets. For instance, in 1986, Palantir was publishing Indexer and MathFlash, neither of which I remember. But I do recall Palantir's short-lived success as a Windows 3.0 developer, when the company sold an adequate spell checker add-on.

Lesson time

Will the dot com industry follow the same path? Will 95% of the companies who built a business model around the Internet fail, just like companies who established businesses based on DOS, or Atari, or Alpha Micro or Tandy 1000? I expect so, though I lack the wisdom to pick the survivors.

Yet, I think it'll be easier to confront the imminent doom-and-gloom if you keep in mind that the industry has been here before—and it'll be here again.