August 11, 2009

Has Jeff Atwood Jumped The Shark?

Full disclosure: I love Jeff Atwood's blog and think he is a great asset to the programming community. A lot of what I know about programming, I've learned from him. His new business, Stack Overflow, has helped programmers all over the world get answers to their technical questions.

But I sometimes wonder how his business has become so successful when his business knowledge is so apparently lacking. Here are summaries of a few of his recent posts:

Software Pricing: Are We Doing It Wrong?

Jeff thinks that if Microsoft would radically lower the price of its Windows operating system, the increased sales volume would more than make up for the lower margins.

I teach this concept in my Marketing classes, and it's called Elasticity of Demand. I draw a demand curve on the board for elastic products and inelastic products, and show the differing sizes of the rectangles under each curve when the price changes, and then we eventually conclude that revenue is maximized when the price is set to the point on the demand curve where elasticity = 1.

Had he known this, Mr. Atwood would probably realize that Microsoft has certainly considered the question of pricing very carefully and set their prices very deliberately. He would also realize that the price elasticity of demand for Microsoft Windows does not make his suggestion feasible.

Oh, You Wanted "Awesome" Edition

Here, he says that the Microsoft marketing department is run by weasels because they charge different prices for different editions of their software. As if charging different prices for essentially the same product is some new and radical thing.

I teach this to ninth graders in Intro To Marketing, too. Companies do this with all sorts of products, from breakfast cereals and computers to rock concerts and plane rides. It turns out that there are good and valid reasons for this. But Mr. Atwood chalks it up to "marketing weasels".

What's totally baffling, though, is that he's doing this with his own product, the Stack Exchange engine, even after decrying the practice.

Jeff Atwood is a great blogger, teacher, and programmer. But some of his opinions (including his suggestion to open source his product and destroy his own income stream) show a lack of knowledge of basic, fundamental business concepts.

America is prosperous because of entrepreneurs like Jeff Atwood. One day, some of our students will become entrepreneurs. Let's give them the knowledge they need to be successful. There is value in high school business education.

Makes you wonder who else has jumped the shark.

Photo courtesey Stack Overflow

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