My big problem is that software companies charge higher and higher prices and use annoying dongles which punish the people who actually buy the software. People are going to crack it anyway, why bother with the dongle?
That being said, software companies have little to blame but themselves. It's not that their screwing the consumer, it's that they are missing the opportunity.
In my opinion, there's a lot of missed opportunities:
Modular Upgrades - Okay, let's say that I want to record and playback audio with basic functions. A company ought to sell a stable and efficient audio tracking software for $100, something easily manageable by most people. But then I realize I need better plugins. Now I have the ability to buy plugins from whomever, but if I were a smart manufacturer, I might sell little plugin packs for my own software for $100. I'd sell MIDI functionality for $100. I'd sell instrument packs for $100. That way people who wouldn't buy my software at $400 because they wouldn't use the plugins and instruments would buy it at $100. And people who need the additionally functionality can buy it.
Unified Software - Kind of tags on to my last point, but it seems pretty inefficient to manage Cubase LE, Cubase SE, Cubase SX, Cubase 4,
Cubase 4 Studio, on down the line. They should all run on the same engine. If there's dramatically different features, go ahead and cripple/remove them from the software, but not to a dramatic extent. For example, why should I be limited to 12 busses on Logic Express when I can have unlimited at Pro? There's no difference in coding, it's just a block. But this efficiency in software will lower development costs, allowing you to undercut the competition's prices and forcing them to do the same.
Copy Protection - Some people will steal software. If you want to have a dongle to save serial number and installation info, that's great, but don't require it to run. It really ticks me off that I can't just grab and go a MacBook and run Logic Pro, Waves, URS, etc...I need a half dozen dongles. Again, you are only punishing the people who bought the software.
Proprietary Hardware - A great way to prevent software theft, but a great way to kill your software. Ask Sony about their proprietary format track record...Betamax, Minidisc, SACD...they don't learn and they always have cool stuff that sucks to use because it never gets adopted.
Upgrade Paths - First off, if you subscribe to my efficiency notion, you will need fewer upgrades because initial development goes into stability and you don't have to patch it up as often. It's like OSX...development goes into new features, not stability patches.
But the upgrade prices are a good notion...they could be better. First off, if you subscribe to my modular notion, you won't have to update your audio engine, interface, plugins, instruments, MIDI, all at once. This would lower upgrade costs because you only have to upgrade what you use. So if your initial DAW costs $100, a major upgrade would cost $25. And each upgrade set would be $25.
Furthermore, another reservation is "what if a new one comes out?" I say offer subscription-based upgrades...free upgrades for the first six months, then $50 a year, or something like that. Free patches for your version through production cycle.
Long story short, these companies are using and outdated business model. Yes, packaging works great for some things, but not when it's so easy to steal them.
The Line 6 POD xt is a great model to follow...you buy the initial stuff which has a little bit of everything. Then you load in model "packs" that add functionality. The core code actually embraces the crippled code and allows you the flexibility to buy what you need, which actually increases overall revenues. And maybe you offer little bundles, Home, Studio, and Pro with a little discount for having all the bundles.