Product Announcement
May 23rd, 2008 by Mark Dixon. Posted in EnerjyAfter much thought, we have decided that selling Java development tools is not a viable business model for us. Several recent events have helped us reach this conclusion:
- At JavaOne this year, free tools completely dominated the sessions. The exhibit hall was sparsely filled, and while we saw lots of interest in free t-shirts and spin-the-wheel games, there wasn’t much interest in the vendors’ products themselves.
- Our friends at Agitar have begun to wind up operations. It was interesting to watch them go through several iterations of their business model but ultimately they were unable to find anything that gave them a reasonable return.
- Sales of our own product have been slower than we had anticipated.
Ironically, I was putting together my own budget for next year and realized that there just aren’t any software purchases on there. We’ve bought a few specialized pieces of software - Mathematica for the index work; JProfiler for performance tuning and Atlassian’s Jira and Bamboo - but we’ve moved to free tools for everything else. Atlassian has insane maintenance prices, so if anything happened to Jira or Bamboo, we’d almost certainly replace them with Trac and something like Hudson.
The good news is that we are absolutely committed to the Enerjy product and, therefore, with immediate effect, the Enerjy plugin for Eclipse is available at no charge. Our goal is to become the most widely used static code analysis tool in the Eclipse world by providing a wide but pragmatic ruleset and the same level of seamless integration that you’ve come to expect from Enerjy. We have great plans for widening the ruleset and making the configuration wizard smarter to help manage all those extra rules.
So, how are we going to stay in business if the product is free? Well, we run a very tight ship here, and we have sufficient funding to continue for the foreseeable future. Moving forward, we have had success in the past providing expert advice to organizations on code quality. With the additional data and experience we have gained from the Enerjy Index, the plugin and Bugpedia we believe that we can offer unique, technology-based consulting services to companies seeking help with code quality issues.
To those users who purchased the product after April 1, we will be contacting you to arrange a refund of your purchase price.
If you have any questions please post them here or, if you prefer, contact me directly at mark_dixon at enerjy.com.
May 27th, 2008 at 6:52 am
If you are moving to a true open-source model, you may qualify for the Jira/Bamboo licences for free: http://www.atlassian.com/software/jira/licensing-faq.jsp#open-source
May 28th, 2008 at 12:45 am
Hi Mark.
Do you think the problem with the product or with the market?
I’m sure you have a great product (I just installed it, so I’m new), however, there are very popular product which provide functionality which is close enough, especially the all time favorite PMD.
You are using JProfiler (me too) because the open source tools in this area don’t come close (for me, TPTP doesn’t work on my Mac). So, is it just a matter of finding the right niche or a hopeless battle?
May 28th, 2008 at 9:43 am
Sad news. Its also sad that you’ve decided to contribute to the problem that you say caused you to exit the product business…i.e. free tools.
Instantiations has a very healthy and growing Java development tools business. Our CodePro and WindowBuilder product lines successfully compete with free tools (and other commercial tools) by adding tremendous additional value and strong ROI. We believe those are the keys to success.
Interestingly, our experience at JavaOne was quite different than Enerjy’s. Our booth was busy, we collected almost 500 leads, and met many prospective new customers.
We wish you good luck with your new consulting business.
Regards,
Mike Taylor
CEO
Instantiations
May 28th, 2008 at 5:16 pm
Rich, good point. We haven’t decided yet whether we want to move to open source. There are clear benefits to both approaches and thanks for pointing out one that I’d forgotten.
May 28th, 2008 at 5:33 pm
Zviki, interesting question. I guess ultimately the answer to your question has to be that it’s the product so there’s always the possibility of finding a niche. If you had a Java tool that did something unique and valuable then it would be harder to sell it than it was 10 years ago but still possible. The nature of the market, tho, is that those niches are much smaller and further apart than ever before. Even if you can find a product with commercial potential, it’s hard to run a tools business on a single product and the usual approach of growth through creating a suite of tools is next to impossible.
I think JProfiler and YourKit are a good example. They’re effectively single-product companies and they survive by keeping their overheads low (ever seen ‘we’re hiring’ on their sites?) but they can’t grow. My view also is that one of the key reasons that they’ve survived is that Java developers can’t write profilers (they need platform-specific C/C++ skills) so they haven’t come to the attention of open-source developers. Even in their case, having seen the demo of the upcoming profiling available in the standard Java platform I’d be worried. You can talk about competing on features and ROI and all that stuff, but ultimately a free tool only has to do a good enough job to destroy the market for commercial competitors.
May 28th, 2008 at 11:59 pm
After the vendors are gone, what will happen them. The brave new FSF world?
Regards
Friedrich
May 30th, 2008 at 3:04 pm
Mark: “Even in their case, having seen the demo of the upcoming profiling available in the standard Java platform I’d be worried.”
I tend to ignore what was referred to as “extreme innovations” at JavaOne especially “visual” plug-in shell demos. Instead I just benchmark the solutions themselves and determine whether they could compete in the production space. They cannot.
William
June 2nd, 2008 at 4:31 pm
Friedrich - liberal that I am it feels strange saying it but I think the market will take care of this. If you have a tool that’s innovative and offers real benefits them I’m sure there’s a business to be had there. Setting up a software company is easier than ever today and, although the bar will be high, I think funding will still be available. What you can’t do anymore, though, is create a tool that ‘only’ offers a marginal improvement over existing free tools even if the value of the time that tool can save exceeds the license cost of the tool.
Our experience of talking to users also shows a real hangover from the tools frenzy of recent years. We’ve spoken to shops that have totally frozen their tools budget after spending 6-figure sums with vendors and seeing no benefit. Of course vendors themselves are primarily at fault here, turning ideas (MDA springs to mind) into expensive tools long before they’re ready for production. Developers are understandably sceptical and maybe have swung too far away from commercial tools. The balance may well return in future years.
Mark
June 12th, 2008 at 3:03 am
Interresting.
We’ve tried for ten years to sell a tool, with marginal success. We’ve found that in order to sell a tool, we must also sell a project that incorporates that tool into the customers business.
In our case, it is a matter of “tool” vs. “solution”, but even the solution is a hard sell. In spite of well documented cost/benefit figures, our experience is that customers are much more likely to invest in (internal) man-hours than tools (and related projects).
There seems to be som irrational business logic at work here, suggesting that a man-hour saved is worth a lot less than the cost of a man-hour spend.
On a side note, we are ourselves currently using Eclipse rather then IDEA, though IDEA is not particularly expensive, and by far the better IDE. I guess it is human nature to choose “free and good-enough” over “cheap and great”.
June 12th, 2008 at 10:52 am
Mark,
It’s interesting to see that you guys have decided to leave the commercial tools market. I myself was a user of your code analysis tools several years back when there were very few competitors in this space and decent open source solutions just didn’t exist. Much has changed since then and I can understand the rationale behind your decision. As a provider of software component ourselves, we have also found it becoming more and more difficult over the years to compete with OS solutions. I think however that this is a natural evolution in OS v.s. commercial software:
1. Market starts with a lack of quality OS solutions
2. Quality commercial solutions offered to meet demand and quickly gain marketshare.
3. Open source solutions improve, gaining more community support and eventually (albeit usually slowly) taking over marketshare of commercial solutions. This typically results in pushing commercial vendors into similar markets where they can better compete (support, consulting, enterprise solutions), or by continuing to add real value to their products that warrant their use over OS solutions.
4. Lastly, sometimes the OS vendors get acquired by larger companies.
The cases where this does not seem to happen are when:
1. There is a significant REAL (not marketing hype) advantage to using commercial solution v.s. open-source solution. This could be anything from performance, value-added features or technical support.
2. There is a large cost in switching from one vendor to another. Cost may come in the form of learning curve, actual cost, cost to integrate new solution with existing solutions etc. This may not prevent commercial vendors from losing marketshare, but in many cases will allow them to keep their existing customers and support/maint. revenues.
3. There are market barriers to entry for competitors.
I think the problem with many developer tools businesses today is that there are very little switching costs. The result is that given a comparable or “good enough” OS solution, developers will usually go OS.
It is interesting to see that you are looking to change your business model from software to services. I do however wonder what level of consulting you could provide to these businesses that you don’t provide already, and if there really is a demand for this. Is this level of support something that your customers have asked for already?
June 12th, 2008 at 1:43 pm
Niels, very well put. Thanks for sharing your experiences. You’re right, it’s very easy to create an ROI story for a $200 tool but it just doesn’t make any difference. If you haven’t read it, take a look at the book Predictably Irrational by Dan Ariely. It’s a fun read and there are a couple of relevant chapters. One explores how people’s behavior changes once the price drops to ‘free’. Another looks at how people prefer to avoid loss even if that reduces their potential upside. So although a tool may give you a chance of gaining some productivity, there is also a chance that it won’t work out and humans strongly dislike the risk that the money spent will be wasted.
Mark