The world could run on older hardware if software optimization was a priority

There is an argument to be made that the market buys bug-filled, inefficient software about as well as it buys pristine software. And one of them is the cheapest software you could make.

It's similar to the "Market for Lemons" story. In short, the market sells as if all goods were high-quality but underhandedly reduces the quality to reduce marginal costs. The buyer cannot differentiate between high and low-quality goods before buying, so the demand for high and low-quality goods is artificially even. The cause is asymmetric information.

This is already true and will become increasingly more true for AI. The user cannot differentiate between sophisticated machine learning applications and a washing machine spin cycle calling itself AI. The AI label itself commands a price premium. The user overpays significantly for a washing machine[0].

It's fundamentally the same thing when a buyer overpays for crap software, thinking it's designed and written by technologists and experts. But IC1-3s write 99% of software, and the 1 QA guy in 99% of tech companies is the sole measure to improve quality beyond "meets acceptance criteria". Occasionally, a flock of interns will perform an "LGTM" incantation in hopes of improving the software, but even that is rarely done.

[0] https://www.lg.com/uk/lg-experience/inspiration/lg-ai-wash-e...

The dumbest and most obvious of realizations finally dawned on me after trying to build a software startup that was based on quality differentiation. We were sure that a better product would win people over and lead to viral success. It didn’t. Things grew, but so slowly that we ran out of money after a few years before reaching break even.

What I realized is that lower costs, and therefore lower quality, are a competitive advantage in a competitive market. Duh. I’m sure I knew and said that in college and for years before my own startup attempt, but this time I really felt it in my bones. It suddenly made me realize exactly why everything in the market is mediocre, and why high quality things always get worse when they get more popular. Pressure to reduce costs grows with the scale of a product. Duh. People want cheap, so if you sell something people want, someone will make it for less by cutting “costs” (quality). Duh. What companies do is pay the minimum they need in order to stay alive & profitable. I don’t mean it never happens, sometimes people get excited and spend for short bursts, young companies often try to make high quality stuff, but eventually there will be an inevitable slide toward minimal spending.

There’s probably another name for this, it’s not quite the Market for Lemons idea. I don’t think this leads to market collapse, I think it just leads to stable mediocrity everywhere, and that’s what we have.

You're laying it out like it's universal, in my experience there are products where people will seek for the cheapest good enough but there are also other product that people know they want quality and are willing to pay more.

Take cars for instance, if all people wanted the cheapest one then Mercedes or even Volkswagen would be out of business.

Same for professional tools and products, you save more by buying quality product.

And then, even in computer and technology. Apple iPhone aren't cheap at all, MacBook come with soldered ram and storage, high price, yet a big part of people are willing to buy that instead of the usual windows bloated spyware laptop that run well enough and is cheap.

Not everyone wants the cheapest, but lemons fail and collapse the expensive part of the market with superior goods.

To borrow your example, it's as if Mercedes started giving every 4th customer a Lada instead (after the papers are signed). The expensive Mercedes market would quickly no longer meet the luxury demand of wealthy buyers and collapse. Not the least because Mercedes would start showing super-normal profits, and all other luxury brands would get in on the same business model. It's a race to the bottom. When one seller decreases the quality, so must others. Otherwise, they'll soon be bought out, and that's the best-case scenario compared to being outcompeted.

There is some evidence that the expensive software market has collapsed. In the 00s and 90s, we used to have expensive and cheap video games, expensive and cheap video editing software, and expensive and cheap office suites. Now, we have homogeneous software in every niche — similar features and similar (relatively cheap) prices. AAA game companies attempting to raise their prices back to 90s levels (which would make a AAA game $170+ in today's money) simply cannot operate in the expensive software market. First, there was consumer distrust due to broken software, then there were no more consumers in that expensive-end market segment.

Hardware you mention (iPhones, Androids, Macs, PCs) still have superior and inferior hardware options. Both ends of the market exist. The same applies to most consumer goods - groceries, clothes, shoes, jewelry, cars, fuel, etc. However, for software, the top end of the market is now non-existent. It's gone the way of expensive secondary market (resale) cars, thanks to how those with hidden defects undercut their price and destroyed consumer trust.