Maximizing profit selling C compilers
Upgrades are the lifeblood of established software companies. I recently came across the paper Information Goods Upgrades: Theory and Evidence and what caught my attention was one of the datasets the author had collected, first purchase and upgrade price of various PC C/C++ compilers between 1987 and 1997. What’s more the author still had the data and was willing to share it, yay!
By the early 1990s I was no longer actively involved in C compilers, but was involved in C static analysis on non-PC platforms. So my view of the 1990s C compiler market is a bit sketchy.
Compiler companies, like other companies, want to maximize their revenue and THE decision that has to be made is the price to charge for a compiler (compiler writers are also developers and hate high prices for compilers and those that failed to charge enough for their product soon went bust). My recollection is that compiler pricing was based around the spending authority of a senior development engineer and also what other companies were charging. Just under £500 was common, with a few companies failing to make a go of selling around the £100 mark. Zorland (later renamed to Zortech) gained huge market share in the mid/late 1980s selling a great C compiler for £29, but a few years later were selling a C++ compiler for a lot more.
To some extent each compiler vendor operates in a monopoly market; developers write code that depends on the features supported by the compiler used and it can be very expensive to port code to a different compiler. How much can vendors charge for a compiler upgrade? Selling the product at a high price provides a rationale for higher priced upgrades (the percentage discount will look good). I wonder how many vendors continued to advertise a high price product just to justify a high upgrade price.
Management always feel an affinity for the OS vendor and Microsoft sold a C compiler and later a C++ compiler. They were both awful and easy, product quality wise, to compete against. Microsoft had to have their own compiler for strategic internal use, with sales to developers being insignificant compared to sales of Word and Excel (Microsoft compiler people I talked to at the time said they had thought of giving the compiler away for free and later it was possible to essentially get the compiler for free by joining the various developer programs). Over time Microsoft improved and compiler companies found easier ways to make money, so the number of compiler vendors dropped to almost one (a company selling C compiler validation suites once told me in the late 1990s that they had sold over 150 copies; someone has to be serious about their compiler to shell out $5,000-$10,000 for software to test it).
By the late 1980s the C compiler market was quite saturated and vendors needed something else to sell. IDEs and debuggers were popular choices. Then along came C++. Yay! A new language meant a new compiler to sell. Compiler vendors’ need for a new compiler to sell is a significantly underestimated factor in C++ gaining traction in developer mind share.
A rarely talked about compiler revenue stream is being paid to port a compiler to a new platform (either because there is an important application hat depend son it or because the platform does not yet have a C compiler). This is the market where gcc had its first successes. Its hard to say whether gcc spread because these niche platforms spread or because gcc cut off revenue to compiler vendors making remaining in the compiler market unattractive to them.
I don’t have any sales figures for any ‘mass’ market C compilers or compilers for any languages. Can any readers help out? In fact any data on compiler sales would be most welcome.