subscription licenses

Filed in archive Technology

Two interesting articles from Cnet.com about the SoftSummit Conference that focused on pay-as-you-go licenses and on-demand software. The first one by Alorie Gilbert is very optimistic about the prospects of the subscription model:

"While perpetual licenses account for 81 percent of all software license revenue today, that will shrink to 66 percent by 2008 as subscription software flourishes, Konary said during her talk. She also predicted that software maintenance revenue will inch up from 41 percent of software industry sales to 49 percent by 2008, as companies look to offset falling license revenue with more after-sale services like better technical support and upgrades. Konary cited the introduction of Microsoft's controversial Software Assurance plan, a software maintenance and upgrade program, as an example."

Published only minutes later is this rather gloomy piece from David Becker also at Cnet.com:

"Sounds good on paper, but both software makers and customers have been slow and inconsistent in committing to the model, for reasons ranging from economics to privacy.

For the software industry, utility pricing poses a threat to the bottom line, said Jason Maynard, an analyst at Merrill Lynch. It's hard to precisely predict software needs, and under standard perpetual license models, that usually results in drastic overbuying."

Everybody agrees software pricing on demand is the future it's just very difficult for customers and vendors to find the right path...