Changing
Software Pricing
Sun
is Having a Sale
I was
tempted to put this in the Office section above, but I decided it
was more about Pricing than Office Software.
It’s really about both.
Jonathan Schwartz, Sun’s COO, would say that it’s about
using software pricing as a disruptive marketing strategy, and he’d
be right.
Sun
is having a sale. If
you can move by December 2, you can buy Sun’s Java Desktop System
(JDS) which includes their desktop software (including StarOffice)
and developer tools (and administrative tools for the multi-user
Linux version); you may have it for half price.
That means $50 per desktop instead of $100 per desktop for
single user Linux or Solaris x86, and $50 per desktop or $25 per
employee (if you buy for every employee) for Multi-User Linux.
It’s
a bargain. If this is
in your plans, you may want to do your Christmas shopping early.
More
info at www.sun.com/software/javadesktopsystem/get/index.html
.
Software Publishers’
Would Prefer Subscription Pricing
Macrovision
has recently finished a study, which they did with the SIIA and
CELUG (Centralized
Electronic Licensing User Group),
that reveal (no surprise here) that enterprise customers and
software publishers are aggressively adopting new software pricing
and licensing models.
- One
of three software publishers offers subscription pricing today,
as their primary pricing model; half are expected to offer it by
2006.
- 67%
of Enterprise customers prefer the perpetual pricing model to
subscription pricing. That’s not surprising – two-thirds of publishers say
that’s their primary model today.
The question is whether the buyers and sellers will move
forward at the same rate.
- Today,
most licensing models are based on per concurrent user and per
seat models. However, pricing models based on such metrics as number
of users, transaction or times used are becoming popular and
half of the software publishers expect to offer them by 2006.
Enterprise buyers still prefer traditional models over
metrics.
- Licensing
enforcement is moving toward digital methods.
It accounts for 46% of enforcement today and is expected
to account for 52% by 2006.
Enterprise users prefer newer enforcement methods such as
product activation and network licensing to older methods such
as serial numbers and dongle keys.
(Personally, I’ve never met anyone who likes dongle
keys. I won’t use
software that requires it.)
- On average, Enterprises pay a maintenance fee for software of 20%, with
large software companies commanding a premium at 22%.
This study is interesting, but it happened (I’d guess) because
Macrovision sells software to ISVs for supporting electronic
licensing and it was looking to understand its customers and the
marketplace.
We think it’s important to consider subscription pricing in
the context of the larger issue of the move to Software as a
Service, discussed elsewhere in this issue. We’re sure Macrovision
is very interested in that subject, too.
The study, “Key Trends in Software Pricing and Licensing,”
is available for free at www.softsummit.com/surveyresult
Microsoft
Changes The SW Pricing Rules For Server Pricing
Just as how processor performance is delivered up is about to
change, as major chip manufacturers begin to bring dual-core chips
to market (which theoretically will offer twice the performance on
each chip), Microsoft has decided to surprise the competition.
It’s announced that it will count multi-core processors as
single chips in its pricing algorithms.
The industry standard is to price software per CPU and each of those
little cores is, in fact, a CPU.
Stay
tuned to see whether price wars ensue, or whether the majority of
software vendors decide to stand pat and see what happens.
We suspect part of what’s going on here is a quick Microsoft
estimate of how many of their customers buy software to run on
single processor systems (lots) versus how many of their upstream
competitors are much more heavily laden with multi-processor
customers. Could make a big difference in revenue impact. But we’re
guessing.
However, eventually even Microsoft will be selling lots of
software on 64-bit, dual core systems so we suspect the market will
have to make some decisions here, sooner or later.
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