Chris Anderson, editor-in-chief of WIRED Magazine, was just named "Editor of the Year" by AdAge. A year ago, he wrote an article in WIRED called "The Long Tail," and has turned it into a book which will soon be out.
What is "The Long Tail"? Without getting into heavy-duty statistics, it says that the Internet has killed Pareto.
The Pareto Principle-also known as, "the 80/20 rule"-says that in many environments, 80% of the effects (e.g., sales, profits, new members, errors, etc.) are due to 20% of the causes (e.g., salespeople, products, campaigns, policies, etc.). The WIRED piece focuses initially on the entertainment industry: 80% or more of the revenues come from 20% or fewer of the movies, albums, or TV shows.
So when shelf-space and packaging and distribution are expensive, where will you as a distributor put your dollar? Clearly in the 20%. That's why Blockbuster is aptly named; you will find little else on their shelves.
Netflix, on the other hand, doesn't have those costs. Hold that thought.
What "The Long Tail" points out is that the 20%--the "hits"-may account for 80% of the revenues.
But the total number of people interested in movies-say, documentaries-that are each only interesting to a few people is big. Very big.
Blockbuster can't afford to stock the 40,000 current documentaries, when they will only be rented infrequently.
So Netflix caters to a huge and growing number of niches-the "Long Tail" word that contrasts with "hits."
"Well, Joel, that's all very interesting-but what is the application to engineering software?" I think it's pretty simple, actually. Here's my take.
Engineering professionals in all industries-automotive, aerospace, consumer products, electrical machinery, construction, and more-buy the same drafting software. Not to put too fine a point on it-Autocad.
For 3D modeling, things are somewhat more diverse. Likewise for analysis and simulation. But basically, lots of people use software that is not tuned to their needs.
The reasons are obvious: Economics. Autodesk, UGS, Dassault, PTC, and all the smaller players cannot afford to create customized packages for niche markets. After all, how many, say, organ pipe manufacturers are there?
Of course, application software that sits on top of existing CAD programs is not a new idea. But several trends are now converging so that it might just begin to make sense to address the "long tail" of the engineering market with niche-oriented products:
- On-line delivery mechanisms and sufficient bandwidth are now generally available.
- Component software is a reality.
- The market has become accustomed to html documentation, and no longer insists on paper.
- User-interface approaches have become much more uniform than ever before.
- All the CAD vendors, and many of the analysis and simulation vendors, have made their systems much more programmable than ever before.
The idea of plug-in specialized programs was a huge factor in making Autocad a star, and it was not original with them; older turnkey systems had specialized applications, too. What is now different is the economic justification-low-cost publishing and distribution-and the ease of integration.
Until recently, most add-in apps required some computer expertise to integrate, and they were often incompatible with one another. Today, the operating system and the base CAD program-and in many cases, the base analysis or simulation program-do a lot more of the infrastructure "heavy lifting." Application developers can thus focus on the application.
I think the time may have arrived for a niche-application publisher to profitably produce a catalog of add-ins for major packages, each of which addresses a market of only a few thousand, or even a few hundred, seats.
Perhaps the model is to be found in book publishing. The small publisher contracts with authors, and does much of the packaging and distribution. Authors provide the specialized content-as well as knowledge of the specialized niche.
Of course, not every left-handed carpenter who specializes in maple needs a CAD add-in to tune the system. But there are many niches where the right engineering software could have a significant effect on productivity. Engineering software entrepreneurs might find it is possible to lay claim to a number of such niches, maybe basing applications on a common interface to a popular CAD system. I think the Internet and the market are both ready for such an approach.
Joel Orr has been consulting, writing, and speaking about engineering software for more than three decades. Visit his website at www.joelorr.com.