The Coming Disintegration Of Corporate Capitalism - SAP Plugs Profit Hole With Support Price Hike
I’m not going to write a long post on this but I want to point it out because of what I have said on here as it pertains to this space. That is, as part of the disintegration of capitalism, the enterprise software space is headed for a massive turmoil and possibly even disaster. Below in italics are some past remarks made on here about the enterprise software space and its coming crisis. Customers are not taking kindly to the enterprise software usury pricing model or SAP’s latest announcement. This announcement has nothing to do with value received by customers. It has to do with SAP keeping the massive profit bubble going through greater predatory usury at the expense of its clients. ie, Capitalism’s self-interest. Once a client is locked in, they are bilked for everything enterprise software firms can get. This is typical of the entire industry and, frankly, systemically part of the internal contradictions of capitalism. As mocked on here countless times, this was not a financial crisis nor is it a debt crisis. It was an economic collapse and the whole corporate capitalist system is now teetering on the precipice.
Prior remarks on this space below:
In some ways this software business model is very comparable to the debt serfdom we see banksters attempting to inflict on society. A dynamic driven by corporation's search for greater profits and, thus, control. But, the serfdom in the case of business software firms are unsustainable, predatory software annuity streams (annual debt taxes) enforced by the likes of Oracle, SAP, IBM, HP, Cisco, Dell and EMC. Make no mistake, these companies are predatory in their methods used to enforce these software revenue streams and pricing models just as Wall Street uses predation to enforce its debt serfdom, just as the industrial food monopoly uses predation to enforce its toxic food serfdom and just as the health care monopoly uses predation to enforce its unsustainable pricing predation and serfdom. When the corporate profit bubble pops, just as the housing bubble fueled massive Wall Street profits, IT business models for major purveyors are going to be devastated. You mark my word. When I wrote seven years ago of IBM’s stock taking a dive to as low as the mid 20s, I wasn’t just whistling Dixie. My experiences working in management consulting and information-based solutions gives me a very unique perspective on corporate America’s strategies and vulnerabilities. This is going to happen.
Small perturbations are already being felt in this space. But, no one is listening. Or no one that understands what is really going on in the global economy. Similar to the volatility surrounding the revolt against debt serfdom, corporate software customers are already starting to change their behavior. I have seen some plausible analyses that place global business clients some $300 billion dollars in arrears in their software upgrade and maintenance cycles. Client companies simply aren’t going to keep forking over predatory software fees just because it benefits the bottom line of IBM, Oracle, HP or SAP. And, software upgrades are incredibly expensive beyond the incredibly expensive initial price. If the upgrade version fee from a software provider is $1 million, it could take as much as $5 to 10 million or more in additional costs in the form of version dependencies of other software, modifications to applications, new systems software, systems, labor, etc to make these conversions. In other words, change management. So, an estimate of $300 billion of arrearage in upgrade costs could easily be the tip of a multi-trillion dollar future obligation for software clients. We can more than likely expect this model is going to bust just as the debt-based serfdom model is busting. We can expect the predictability of software revenue streams and associated profitability is more than likely going to turn out to be a myth as the global economy continues its death spiral. So too will the predatory business software space start its death spiral. No one in this industry is prepared for this coming dynamic. No one even sees it coming.
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