Withholding Tax (if you are non-US, selling to US)
"Components" are taxed at 5%; "desktop tools" (like compilers, editors, IDEs etc) are taxed at 0%. The tax is an admin hassle all round, so this is one plus for not selling components. (NB: this is an oversimplification, there's tax treaties, 30% tax if not under a treaty, byzantine IRS forms, tax rulings on the definition of "royalty" for components, etc).
ASIDE an idea: "Software Components as a Service". That is, it's in the cloud and paid for like a SaaS; but the service it provides is not an end-point (like an API to a business), but a transformation - the kind of thing you'd normally call a library for. e.g. text->pdf. Sounds inefficient, but you co-host with AWS/dropbox/heroku/GoogleApps etc so bandwidth is fast and free. (Alt: let the customer install a copy in the cloud, but you charge like a SaaS business model - an advantage for them is they can expense it monthly, not taxed like a capital purchase).
Discussion (though might be dying): http://discuss.joelonsoftware.com/?biz
Withholding Tax (if you are non-US, selling to US) "Components" are taxed at 5%; "desktop tools" (like compilers, editors, IDEs etc) are taxed at 0%. The tax is an admin hassle all round, so this is one plus for not selling components. (NB: this is an oversimplification, there's tax treaties, 30% tax if not under a treaty, byzantine IRS forms, tax rulings on the definition of "royalty" for components, etc).
ASIDE an idea: "Software Components as a Service". That is, it's in the cloud and paid for like a SaaS; but the service it provides is not an end-point (like an API to a business), but a transformation - the kind of thing you'd normally call a library for. e.g. text->pdf. Sounds inefficient, but you co-host with AWS/dropbox/heroku/GoogleApps etc so bandwidth is fast and free. (Alt: let the customer install a copy in the cloud, but you charge like a SaaS business model - an advantage for them is they can expense it monthly, not taxed like a capital purchase).
I've seen some evidence of this, in the form of cloud integration services e.g. http://www-03.ibm.com/software/products/us/en/castiron-cloud... (2010), but it's still mostly about integrating end-points, not the bits in between.