Re: Incorporating 9X into Ada courses

[seas.gwu.edu!mfeldman@uunet.uu.net (Michael Feldman)]

This is gonna be long, so trash the article now if you wish. :-)

In article <dewar.736239358@schonberg> dewar@schonberg.NYU.EDU (Robert Dewar) w
rites:
>I must say I find Feldman's comment on Ada pricing naive. All this talk of
>gouging tax payers reads well as rabble rousing to the gallery, but does it
>really make sense?

Well, Robert, until my vendor contact admitted it, I thought it was just
rhetoric. But I was really taken aback. See below.
>
>The issue that faces an Ada company is where to price its products in a market
>whose elasticity is not known, but which is suspected to be much less than 1
>(i.e. halving prices will not as much as double sales), and of course in 
>practice the elasticity must be much greater than 1 if halving the price is
>to leave profits stable, let alone growing.

The box the vendors got themselves in was assuming _at the outset_ that
Ada would not be a dual-use technology, and setting prices assuming no
elasticity. Those of us who believed in Ada - as a general-purpose language
for the world - and kept trying to send this message to the vendors right
from the start - were mercilessly blown off. 

In 86 or so, when I first started asking vendors to use the universities 
as partners rather than customers, I was told - quite consistently by all 
of them - that they saw no use in hooking the students and teachers on Ada
because it would be 5 years before those students became decision-makers,
and they weren't sure they'd be around in 5 years. They had so little
confidence in the validity of Ada as a language, and in their own ability
to produce good products, that they were going for the short-term revenue
instead of the long-term growth. Some of us argued that this myopia would
guarantee that the Ada market - and they, by extension - would stay small.

The market is indeed small, as we know only too well. So are the companies.
The degree to which vendor myopia _caused_ our prophecy to come true is, of
course, open to speculation. But come true it has. And the vendors are
_still_ saying that they cannot afford to enter other markets aggressively.
And they are _still_ saying they can't afford to wait for my students
to graduate. See below.
>
>As you know, a fair number of people have lost a lot of money betting on the
>Ada market. Now it may be that Ada companies have got the sums wrong, and that
>they would make more money if they reduced prices.

_Just_ reducing prices won't work. Entering other markets aggressively - to
counter C++ - might. The vendors claim lack of resources. Where do they get
the resources to develop the C++ products into which they are diversifying?
If they don't have resources for both, then in effect a dollar spent on C++
is a dollar _not_ spent on Ada, which amounts to abandoning Ada.
See below.
>
>As it is, several Ada companies have in effect failed (Alsys, Telesoft,
>Systeam), and certainly no one is getting rich in the Ada business. In a 
>situation where everyone is losing money, or at best not making much money,
>it is rather absurd to make accusations of venality. One can accuse Ada
>companies of making the wrong choices -- Mike has gone of on this thetorical
>tact quite effectively in the past -- but it seems silly to accuse someone of
>price gouging when they are losing money!

I would not have made such an accusation had it not come directly from
a vendor person, who said (as exactly as I can recall) that because the
vendors are _prohibited_ from charging the commercial market less than
they charge Uncle Sam, they are keeping their prices high because they
know that if they lower them, they'll have to lower them for Uncle as
well. And they are afraid to do that. Nobody seems ready to even _try_ to
test the elasticity. Instead, they'll go off on new ventures into C++.

This is not my wild-eyed speculation, Robert; I was shocked to
hear it, but there it was - right from a vendor's mouth.
>
>How elastic is the Ada market? If you really believe the elasticity is
>greater than 1, and that hence it would benefit Ada companies to reduce
>prices, then concentrate on that point, and save the accusatory approach
>for a situation in which it is more appropriate!
>
Well, as I said, I didn't go off on this tirade idly; had I not heard it
straight from my source, I never would have mentioned it.

You may recall that a number of months ago Rich Pattis posted some of
IBM's commercial compiler prices for different RS-6000 AIX language processors.
Here they are again for reference:

       Ada   C++   Cobol  Fortran  Pascal
CPU
 D5   4010   918    1140      684
 E5   8020  1835    2285     1595    1370
 F5  16040  3675    4580     3195    2745
 G5  32090  7350    9170     6390    5495

These are from IBM, not a small Ada company. I put them on the screen
in a Tri-Ada 92 session, with the comment that it was not obvious to me
that the market for Cobol on RS-6000's was roughly 4 times the size of
that for Ada. I explained also that I was using IBM's prices right out
of their catalog, and that other Ada vendors' prices were similar.

I was subsequently excoriated (privately) by some friends at IBM, who
acknowledged that my numbers were correct, but said that I did IBM a 
disservice by not emphasizing that IBM's prices were no worse than other 
Ada vendors. They referred to the other Ada vendors as "the competition".
I asked them whether they perceived that the _other languages_ were
competition. They said yes, but their primary competitors were the
other Ada companies, and that IBM perceives its Ada market as almost
entirely governmental. So their prices, and everyone else's stay at
several times the price of the other languages.

The person who occasioned the original post was not (NOT!) from IBM,
but it's clear that IBM suffers from the same syndrome. There can be no
other reason for the prices to be so high except that the taxpayer will
pay them and nobody else will. Indeed, that is, in essence, what my
vendor contact was saying.

Venality, Robert? I did not use that word. I called it cynicism, and I am
inclined to stand by that characterization. Ada product prices amount to
a government subsidy. And that leaves the rest of us out in the cold,
because the prices cannot be lower in the unsubsidized market sector.

Sorry for going on about this, but I think I have my facts straight.
My long-time conjecture - which I never had the gall to state publicly -
was confirmed in a simple phone call the other day.

Mike Feldman