CS 207: The Economics of Software.

Gio Wiederhold

File created 21 February 2009. Update 24 August 2010. May be revised.

The main page for CS207 is now on the CS Wiki as CS207, and the weekly class notes, references, etc., can be reached from there.

This course is intended for students interested in the software industry at all levels. It will provide an understanding how software products are moved into the marketplace and how the resulting intellectual property is exploited. No specific background is required. The course will introduce concepts that are outside of the common knowledge of computer scientists and requires becoming familiar with relevant business terms and concepts. Spreadsheet computations will be used to quantitatively compare alternatives. The understanding gained will have broader applicability than just software, but contribute to informed decision-making in high-tech product design, acquisition, production, marketing, selection of business structures, outsourcing, and even the impact of taxation policies.

Syllabus:

Why should software be valued? Principles of valuation. Cost versus value. Market value of software companies. Intellectual capital and property (IP). The role of patents, copyrights, and trade secrets. Open source software. Life and lag of software innovation. Sales expectations and discounting. Alternate business models. Licensing. Separation of use rights from the property itself. Risks when outsourcing and offshoring development. Effects of using taxhavens to house IP.

This class is being offered again fall Quarter 2010/2011 for 1 unit, P/F for attendance only. Students having in depth interest can sign up for a complementary directed reading course and prepare a paper on a relevant topic. Such a paper might be a business plan, a recommendation for stimulating high-tech business, or advice for educational improvements needed.

Time Schedule:

Fall Quarter 2010/2011, Fridays 2:15pm in Gates B12. The course, as currently defined, will not be offered long term.

Instructor:

Gio Wiederhold

Motivation:

Few computer professionals are aware of the economic value of their products. The assessment of the value of their work has been left to business experts, economists, lawyers, and promotors. The lack of understanding hinders rational descision-making for tradeoffs in software design and implementation, market timming, and chosing business models. Having simple, quantitative models enables substantiating and revision of decisons made when planning software products.