CS 207: The Economics of Software.

Gio Wiederhold

File created 21 February 2009. Updated 11 April 2013. This file is not regularily revised.

The primary page for CS207 is the CS Wiki for CS207
That page, and its subsidiary pages will be updated as the course progresses. It also contains pointers to prior year's weekly class notes, readings, references, etc.,

This page is only an introduction to CS207.

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 also contribute to informed decision-making in high-tech product design, acquisition, production, marketing, selection of business structures, outsourcing, and the impact of offshoring and taxation policies.

CS207 is a class with an objective, not a seminar.


Why should software be valued? Principles of valuation. Cost versus value. Market value of software companies. Examples of estimation of the value of software. 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.

Most two-hour sessions will consist of a 50-minute course style presenation on a topic and a 50-minute presentation by an outside expert in the same topic, allowing for some discussion. When there is no outside speaker, the discussion will be among the class particpants.

C207 is offered for 2 units, P/F for

  1. a paper on a topic selected by the enrolled student relevant to the class
  2. attendance in each class or a brief report on a class topic.
The paper should be well constructed: topic identified, discussed, criticized, conclusion, references.

All submissions in electronic form to Gio@cs.stanford.edu.

Time Schedule:

Fall Quarter 2013-2014, Fridays 2:15 - 4:05, likely in Hewlett 103, in Gates B12, starting 27 September 2013, the final class 6 December 2011. Attendance will be recorded starting 4 October 2011. A draft of the paper is due 15 November 2013 and will receive feedback by 25 Novemnber 2013. All papers are due on Friday, 6 December 2013.
The specific Topic schedule is on the CS207 Wiki.


Gio Wiederhold, Prof. Emeritus, Gates 436, hours by appointment.


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.