You Will Subscribe To, Not Buy Software
Category: Tablets, Smartphones
Especially in a BYOD environment, software subscriptions have a lot going for them, but many just don't like the idea of paying for software and not owning it. The recent revelation that Office 2013, at least in some cases, will come locked to a specific computer, much as OEM Windows does, shows how the subscription model, a.k.a.SaaS or Software as a Service, is coming whether we like it or not.
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Here's what a few of us at BYTE think:
Subscription pricing lowers the barriers to entry for small businesses. For example, software companies like Adobe offer substantial discounts for subscriptions in fact at current pricing it would take 33 years to justify buying the Adobe Creative Suite 6 Master Collection ($2,599) up front. Subscription pricing is an obvious attempt to nudge organizations but, what might some of the disadvantages be for small business?
Vendor lock-in is a potential problem, especially considering the Adobe example. Projects and files will no longer be accessible if a customer jumps ship &%151; the software that opens the files will have disappeared. It's true a company could re-activate a subscription for a limited time if those files are needed. But, there may be other unforeseen consequences that diminish the flexibility a subscription seems to offer.
More frequent contact with a software sales team to provide feedback and support may well turn out to be a sales opportunity. I'm sure subscriptions will offer more opportunities to up-sell and cross-sell existing clients on other products and services. On the flip side, monthly subscriptions would force sales teams to consider long-term customer needs, and be less inclined to do hit-and-run sales.
If the various licensing issues can be worked out, I think that the elephant in the room of subscription services are the cable companies. Customers are already familiar with the cable subscription model, and while many voice complaints, the overwhelming majority of customers just go with the flow.
Look at the example of Comcast: they already bundle the Norton Security Suite with their XFINITY cable subscriptions. They offer free dedicated apps for mobile devices, both iOS and Android. Customers are constantly being offered new packages of services, so how big a reach would it be for them to start to include application software subscriptions?
Log into your cable account, and while you are selecting your premium movie package you also have the opportunity to add basic Office 365 or Google Drive or some private brand combination of basic knowledge worker applications. From there, it's not much of a reach to add additional up-sells; subscriptions to higher value applications such as Adobe Photoshop, or targeted packages such as bundles for students or upscale business services.
The cable companies are already in your home and quite possibly your business. If they offer the software as part of the monthly subscription fee we are already conditioned to pay, there's a good chance that a majority of their customers would start using those services. And if you were to combine that with starter versions of the applications already being installed on new computers that could be activated via these subscription services, it would become the de facto methodology for application delivery.
It started with enterprises, but software companies are trying to move everything to a subscription model. As a customer, either enterprise, SMB or consumer, it's easy to focus on the downsides, which are basically a commitment to buy things you don't necessarily want and some loss of control over the software you run.
It's very good for the software companies because it makes their financials much simpler, but it also has advantages for customers. If you're concerned with licensing compliance, subscriptions make it much simpler. It makes your own financials simpler by giving you a clearer projection of software costs.
We're already used to some software delivered as subscription services: web hosting is really just a software subscription, and always has been. Security software has moved thoroughly from conventional deliver to a subscription model because it makes sense for everyone, and in fact it's untenable any other way now. The subscription is the real product and the software just a delivery method. If the vendors model the subscriptions to cover all your devices i.e. if I were to get antivirus or office on my PCs and tablets and Macs, etc., I can see liking it a lot.
Many consumers never read a EULA (End User License Agreement). Ever. In many cases, even software users were required to activate has been installed on more than one PC, regardless of whether additional installs violate the licensing agreement, simply because the software was considered too expensive. These are the issues that consumer software subscriptions are supposed to target.
The key is how the licensing is written. Many people have more than one computing device and will want to use the software wherever and with whatever they're using. As long as licensing allows them to install it where they need it, and the subscription costs aren't too high, particularly if they don't exceed what a consumer would pay for the software at retail, then all they're really doing is paying for the software and its upgrades over time, and I don't see why a user wouldn't go for it.
Subscriptions for some software may require an online connection to a subscription validation server in order for the software to work. If I have to be online every time I want to use the software, then I could have a problem with the deal. There are ways around this, particularly if the software company is willing not to check *every time*.
I also want the software installed locally and don't want to HAVE to use an online version like Google Drive or Office 365 online. Please don't tie me to the cloud. Not yet. If I have to be online to validate my subscription or to actually run the software, then the subscription model is broken. Once mobile broadband is everywhere, this may be less of an issue.
My biggest complaint about software subscription models is not that they exist, but that they're often lacking in the granularity needed in the real world. They make all that's bad and arbitrary about software licensing even worse.
I speak from experience. If I want to buy the subscription edition of Microsoft Office 2013, I have to buy the full-blown Small Office edition, not the Home edition, since the latter cannot be used for "revenue-generating activity." That means a jump in cost for me, and not because I need more copies of the program, but because of some idiotic delineation on the part of Microsoft about what I can and can't do with the software.
Buying boxed copies would be even worse, since I'd have to get one copy for each computer, and Office 2013's new EULA ties a boxed copy of the product to a single PC for the lifetime of that PC.
By contrast, Adobe's subscription model lets you rent by the month or year, by the individual application or by the suite, doesn't have any restrictions about the mode of use (except for the educational edition of the suite), and doesn't tie you to a single machine.
I suspect the next iteration of Office's subscription services will be a little more attentive to these realities. After all, they did do it with Office 2010: they introduced the Home and Office SKU, a nice compromise between the non-commercial Home and Student version and the full-blown professional-level SKUs. And since Office 2010 suits me just fine for now, I'm in no hurry. Ball's in your court, Microsoft.