The Ascent of the Software Civilization

R. A. Hettinga
Sun, 9 Mar 2003 13:01:01 -0500

The New York Times

March 9, 2003 

The Ascent of the Software Civilization 

TECHNOLOGY euphoria was in the air and stock prices were stratospheric. The shares of some software and computer services companies jumped a hundredfold in a few years. "Never before has the stock market shown quite so much enthusiasm about an industry," a writer for Fortune magazine observed. 

The year was 1968. 

History may provide no sure guide to the future, but it does offer context and insight for the present. And, given the proper twist, history glimmers with a certain knowing humor. In his incisive, panoramic book, "From Airline Reservations to Sonic the Hedgehog: A History of the Software Industry" (MIT Press, $29.95), Martin Campbell-Kelly delivers all three - context, insight, even occasional humor. His treatment of the similarity in the computer mania of the late 1960's and the Internet bubble of the late 1990's is one many telling observations. 

Mr. Campbell-Kelly's book is not for everyone. He is an instructor in computer science at the University of Warwick in England and is a professional historian. His is not a book of insider gossip or of recreated scenes of clashing egos and executive tirades - the stuff of so many business books. Instead, it is the product of his reading and distilling of books, professional journals, magazine and newspaper articles and historical archives over the last four decades. 

The result is a sweeping survey of the software business since the early 1950's, its evolving structure, economics and marketing. The product and company names are so numerous that, at times, they seem to race by in a blur - Cincom, Cullinane, Panosophic, Cytation , Famicom, Xenix, Comshare , Syncsort, Super- Writer, MacNeal-Schwendler and hundreds more. The book is a ready reference for any misguided soul who wants to create a computer trivia game. 

Yet, along the way, Mr. Campbell-Kelly pauses for longer passages on subjects ranging from the role of the government's SAGE air defense-and-surveillance system to the decision by I.B.M. in 1969 to "unbundle" hardware and software sales. The unbundling was "a turning point," the author says, because it ensured a sizable software industry separate from hardware. 

Mr. Campbell-Kelly gives the United States government credit for creating a market for programmers in the 1950's and early 1960's with SAGE, a name derived from "semiautomatic ground environment." About $150 million was spent on its software, and thousands of programmers were trained to work on the project - a veritable "university for programmers." Its alumni went off to populate corporate data centers and to start companies elsewhere. SAGE also tackled a host of technical problems in real-time transaction processing that eased the way for I.B.M.'s development of the Sabre online reservations system, called "the Kid's SAGE," for American Airlines. 

Time and again, the book shows that what seems new in the software industry in fact echoes the past. The engineers who used software formed user groups starting in the 1950's with SHARE, whose members came from companies that used I.B.M. 704 computers. The group's name, though capitalized, was not an acronym. It was what the group did; it shared programs and expertise to help drive down programming costs. 

This was when software was treated as a marketing cost of hardware instead of as a stand-alone product. But, as the author writes, "one of the abiding legacies of the user groups was the perception of software as a free good." In their attitude and behavior, the user groups were very similar to those engaged in today's open-source software projects like GNU Linux, an operating system that is distributed free and is steadily improved and debugged by a network of programmers. 

IN the late 1960's and early 70's, there was great excitement about - and investment in - the notion of computing as a utility-like service that could be delivered to offices and homes to solve all manner of problems. The idea flopped because it proved to be too complex a challenge to write the software needed to distribute computing as a service from a central time-shared machine to many users. Besides, microcomputers, later called personal computers, were about to arrive, putting affordable computing on desktops thanks to the miracle of the microprocessor. 

Today, the utility concept is making a comeback. This time, the industry is betting that 30 years of advances in software, hardware and networking can deliver utility computing. I.B.M. is promoting "on demand" computing, and Hewlett-Packard ,Sun Microsystems and others have similar offerings. Companies like are offering software as a service in an emerging market for so-called application service providers, or A.S.P.'s. "Because the concept was never fully tested in the 1970's," Mr. Campbell-Kelly writes, "history has few lessons to offer the A.S.P. industry." Well, the A.S.P. start-ups certainly hope so. 

As software became a product in its own right, marketing became more important. In the fledgling personal computer industry, some of the tactics were particularly inventive. In 1980, George Tate, a former electronics industry salesman, began marketing a database program he named dBase II. There was no "I," but "II" suggested a second, improved product. This ploy was not uncommon. But in 1983, Mr. Tate took the more imaginative leap, renaming his company Ashton-Tate. 

"There was no Ashton," the author writes, "but it was considered a euphonious and high-sounding name." 

Mr. Campbell-Kelly argues convincingly that Microsoft's stature in the software industry as a whole tends to be overstated. After all, he notes, Microsoft dominates only about 10 percent of the industry, while it has no such sway over large portions of the software business like corporate software, software contractors and consultants. 

"If this book serves no other purpose," he writes, "I hope it will serve as a corrective to the common misconception that Microsoft is the center of the software universe around which all else revolves." 

Mr. Campbell-Kelly is dismissive of the federal antitrust suit filed in 1998. "Exactly why the action was brought remains a mystery," he writes. He is fastidious with footnotes, but there are none near that sentence. It's his opinion, period. 

He may not understand the Microsoft antitrust suit, but he lucidly analyzes Microsoft's mastery of using software and business acumen to build a lucrative technology platform. In Microsoft's case, of course, the technology platform is the Windows operating system. The company encouraged and helped software developers write programs that run on the Microsoft platform, increasing the value of Windows and prompting even more applications to be written on top of Windows. Economists call this commercial snowball "network effects." 

It is nothing new, really. I.B.M., as Mr. Campbell-Kelly explains, did the same thing with its operating system for the I.B.M. 360 mainframe and follow-on products. 

And Sony , in video game consoles, deftly used software to build its technology platform and a thriving ecosystem of game developers supporting its PlayStation platform. Once Sony mastered the economics of software, Sega's Sonic the Hedgehog never had a chance.   

R. A. Hettinga <mailto:>
The Internet Bearer Underwriting Corporation <>
44 Farquhar Street, Boston, MA 02131 USA
"... however it may deserve respect for its usefulness and antiquity,
[predicting the end of the world] has not been found agreeable to
experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'