After Eating It, Software Will Bite The World

Software is eating the world. … All of the technology required to transform industries through software finally works and can be widely delivered at global scale. … Software programming tools and Internet-based services make it easy to launch new global software-powered start-ups in many industries—without the need to invest in new infrastructure and train new employees. … With lower start-up costs and a vastly expanded market for online services, the result is a global economy that for the first time will be fully digitally wired. (more)

For the last seventy years, we have lived in an era of improving computer hardware and software. As hardware got faster and cheaper, software engineers were able to write software at higher levels of abstraction. That and falling hardware costs and our expanding economy fueled an expanding software industry, with more clients asking software to do more things in more industries. Which has enabled software engineers to invest in making more better software tools to support it all. A virtuous cycle.

During such an expanding era, the risks of switching some key task to software often paled to the risks of not switching. Not seeming at all inclined to switch soon could get you abandoned by customers and investors, or beaten by competitors. In contrast, jumping in a bit too early mainly risks increased costs for a short period until you find a better software supplier. Your failure will still give you valuable experience to inform your next attempt, and better solutions are likely on their way, offered by more numerous suppliers who compete more strongly for your business. 

When software suppliers themselves choose what other software suppliers to rely on, they should in principle worry about how long each supplier’s software will be supported, and whether they will raise their prices. But in an expanding software world these are only mild concerns. If some suppliers die or raise their prices, other superior options will probably become available soon. So the usual practice of mostly ignoring future issues works out pretty well.

A similar calculation applies to software maintenance. You might be sloppy and let your software rot faster than it would otherwise have done. But if your product is near state of the art in features, then expanded revenue from your expanded base of customers will usually let you rewrite it all from scratch later. So you worry mostly about staying state of the art, and less about how fast your software rots. 

However, roughly thirty years from now world population will peak, and the world economy will peak not long after. Population and the economy will soon fall by a factor of two every one or two generations. The world’s innovation rate will shrink a bit faster than does this exponentially shrinking economy, and thus innovation, including software innovation, will seem to grind to a halt within a few generations. 

In this new shrinking world, computer hardware stops improving, and the accumulation of durable hardware may basically end the computer hardware industry. (Which may itself end much software progress.) When the economy isn’t large enough to support the huge fixed costs of the computer hardware industry, who will want to pay more for new hardware that isn’t better than plentiful durable old hardware?

In a shrinking world without software innovation, most software suppliers will not be able to count on increasing customer revenue to fund routinely rewriting their software from scratch when it rots. And there won’t be new tools to let new versions be better than old ones. So suppliers will instead pay increasing sums to maintain existing rotting software, and not fear future consequences of raising prices today. As their customer base falls, they must change each remaining customer more, until so many drop away that they must stop maintenance. Cascading failures by their own software suppliers force each supplier to either find a replacement for each support failure, to cut features, or to fail themselves. As suppliers drop out, once competitive software areas become duopolies, then monopolies, then non-maintained products. 

In this world, firms who recently assigned some key task to software could regret that choice, as they face the hard choice of paying increasing costs for software of declining functionality, or switching back to not using software. Instead of eagerly seeking to join a new expanding world of software, they would be looking to escape their reliance on software, for fear of increasingly hungry and bitey software suppliers bleeding them to death. 

In a shrinking world economy, falling populations would raise the cost of supplying city services to partially populated cities. Which would induce people to abandon some cities in order to fill up a few populated cities, to keep city service prices low. Then might even abandon whole nations to crowd into a few remaining ones. Similarly, the world would abandon entire alternative computing ecosystems, such as languages and operating systems, so that they could better share the costs of supporting the few remaining ecosystems. 

Those who bet on the wrong ecosystems and found it hard to switch would lose big time. The winners in this new world would be those who limited their dependence on software to simple systems with limited features that they could maintain mostly themselves, needing minimal support from outsiders. The bitten losers would be those who came to depend on complex systems with too many features that the world could no longer support. 

Declining scale economies, such as from losing most software, would slowly lower per-capita income in this declining world, but it would probably take over a millennia for this to induce sufficient poverty to raise fertility. And, alas, learning about this dark decline scenario will not be enough to scare nations into implementing the feasible fix: borrowing to pay enough to parents to induce over replacement fertility.

Instead, rapidly growing insular fertile subcultures like the Amish and Haredi Jews will eventually restore growth by coming to dominate the world population. Eventually, when the new economy gets larger than its prior peak, there’ll room for new innovation, at least of the sort approved by these once not very tech friendly fundamentalist religious communities. After helped to bite the world down to size, some software may against start to eat the world.