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New Microsoft Feature: Planned Obsolescence
Ryu2 writes: "According to this CNet story, Microsoft is thinking of from its current "perpetual" license scheme to a three-year contract for its enterprise customers, and most of its software. After the three years are up, customers have to pay up again or stop using the software. While the issue of subscriptions has come up before, this seems to imply that Microsoft is abandoning the traditional time-unlimited license altogether. With them setting the precendent, for good or for ill, for many things in the software industry, if this takes hold, how long will it be until every other business software firm jumps on this bandwagon?"
The greedier and more visibly desperate M$ gets, the better the alternatives look.
If you've got a lot of legacy hardware, Linux is the way to go. If not OS X may be your best bet.
MSBPodcast.com The opinions expressed here are my own. If you don't like 'em... Think up your own stuff.
What do you mean, "new"?
I think MS has enough of a track record of breaking compatibility between versions of eg Office, to justify viewing this as just the next logical step.
Sure, at the moment we don't have to upgrade our version of Office - but new PCs come with the latest version, and our clients are using it, so we effectively do have to upgrade.
Saying "I'm sorry, could you resend that as Word 95 format please?" isn't an option with some clients.
Cheers,
Tim
It's official. Most of you are morons.
Before PCs, software was licensed with an annual fee. IBM had elaborate price lists for all kinds of software you could add from sort programs to programming languages. Any companyies tended to buy the licenses.
When PCs came along, (a) you couldn't trust the date on the computer because anyone could change it and (b) the users wouldn't put up with it.
That didn't stop companies like SAS witha a big mainframe/Unix presence to have the same kind of licensing on PCs.
In the Unix world, it was high software license fees that drove people to write free software. But there were still packages that use/used flexlm (one of the most common license managers) to have an annual fee licensing structure.
Frankly, most people won't pay annual renewals. Maybe Office comes bundled with their PC. After a year, they get an email. Pay up or the software won't work. Most people don't use the Office that's bundled and they'll say "Screw this." and let it expire.
Corporations are already amortizing their software cost over 3 years, so they'll compare the annual cost to the annual amortization and they'll probably pay. But they will install controls to make sure they don't pay for a single copy more than is needed.
In the long run, annual licensing models help free software because people have an ongoing incentive to find a free package that meets their needs.
I have discovered a truly marvelous sig, unfortunately the sig limit is too small to contain i
The cost of software can be easily predicted
How come? Unless MS gives you guarantees about pricing for many years down the road (highly unlikely) you have exactly the same predicting power.
Buy: Pay a chunk now, amortize it over three years, do it again at unknown cost.
Rent: Pay monthly over three years, do it again at unknown cost.
they won't have to worry about deploying/managing updates and upgrades
They do. First of all, they'll have to deal with security patches. Second, once three years are over and a new version comes in, who do you think will have to deal with data migration and untangling these little clever hacks that users wrote using the suddenly-not-supported-any-more features?
Getting the latest (or any version) is going to cost $2500. Thats a big expenditure. Now, instead of paying for it all at once, maybe it'd be nice for them to pay $75/month for three years. That'd work out better for a huge majority of customers
In one way, yes. It's always better to pay later than to pay early. In your scheme MS is basically giving everybody a three-year interest-free loan.
On the other hand, the choice disappears: maybe after three years I am in a bad financial shape. Under the 'buy' model my operating costs for software are zero. Under the 'rent' model, my operating costs are determined by MS.
Even if its more than that, say $100/month, its a deal for most customers
It is? 100 x 36 = $3,600. You mean instead of paying $2,500 to use something forever I get to pay $3,600 to use exactly the same thing for 3 years and that's a good deal???!
Thank you, I'll pass.
Kaa
Kaa
Kaa's Law: In any sufficiently large group of people most are idiots.
Unfortunately, this is very short sighted. I agree with you on the quality of W2k.
But, in about 3 years, Microsoft will stop supporting W2k. Any bug or hole that is found thereafter won't be patched. Thus, by then, you'll have two choices: live with a vulnerable OS, or switch to another OS, a newer version of windows most likely.
Of course, all of these (expensive) migrations are an opportunity for open source products to move in. After all, if a (large) company decides not to support a product anymore, you can always do it yourself (being a large company). Might be cheaper than migrating to yet another version of software (be it an OS or an application)
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the pun is mightier than the sword
I don't agree. I think that companies of all sizes actually will LIKE subscription since it means they don't have to pay a huge sum up front but that the cost gets distributed over a longer time period. Remember that if Office costs $X now, it doesn't mean it will cost $X every year if the subscription plans happen but rather $X/5 or whatever, per year. Also, when there's a new version, upgrading is a non-issue cost-wise.
A side effect could be that Microsoft actually starts putting more weight on improving quality rather than adding new features, since there's no need to "lure" old customers to buy the new version - they will still pay for the subscription regardless of what version they are using.
For home users that would rather just pay once and then be done with it, I think subscription will be a bad thing. Someone might have money today and buy MS Office, but in three years, if they are unemployed, they won't be able to continue the subscription. That's a very bad thing.
I think a one-time "unlimited" license should definitely still be an option, but as far as companies not liking subscriptions, I think you're wrong.
Microsoft's old market strategy was to (arguably) improve their products so every three years or so you would have to upgrade to get the latest features, etc. Now they don't feel like reving old software anymore so they are just going to force you to buy a new copy of their software every three years or so.
scent = stinks
cents = expensive
sense = Migration
Microsoft's moves are somewhat enigmatic these days, however they have a keen sense of how to make money off of fortune 500 companies who are willing to dish it out after "TRAPPING" themselves amidst an entire MS environment.
Whats sad though, is at this point it would be extremely expensive for companies to switch their entire company (think big companies like Ernst & Young, Citibank, etc.) to switch over to something else overnight. Even if they were to do so, they would also have to determine what other OS to use, and hope it would still have MS support, since many of their clients are likely to prefer *.doc, *.lxs, etc., files, so even if a company were planning a switch it could take years to "plow the road" from the bumps.
With newer companies starting up its a heck of a lot easier a task to do, and I'm sure many here see the recent changes with MS, so news like this is a plus for the Open Source community, who needs to lock down some standards for a change as well.
Define a standard for corporations like a corporate Linux or BSD distribution which doesn't contain 2-3 cd's full of Window Managers, MP3 players, useless and non business related packages. What does 10 Windows Manager have to do with fulfilling the daily tasks of someone like a secretary, or clerical worker? Absolutely none.
Make it a bit more GUI'er for unknowledgeable persons working with the OS.
Raise the documentation standards on the OS. Make a GUI based help system unskilled operators could use instead of `man something` .
Anyways enough swaying off topic many people (I hope) would understand the aura of where that was going. So will this affect sales of MS in the future? Probably minutely since many people like convenience, and are already trapped within an MS environment, and all this bickering amongst the BSD's/Linux users doesn't help, so for someone like a CEO looking in from the outside, they may see alternative OS' (Linux/BSD/other) as more of a problem than a solution.
Create a business like standard for crying out loud. If NASA can send rockets to west bubble fuck, surely someone can create a "Linux/BSD for Incompetent Workers too Lazy or Dumb to Learn"
Want Root?
Microsoft is losing money. Well, not really. Really Gates has so much money he wipes his butt with $100s. However, the company profit margins are not what they were 3-4 years ago. The primary reason is that people are not buying new computers. Windows ME and 2000 are not meeting sales expectations.
In general, people are reasonably happy with Windows 98, Word, and IE. And a reasonably happy consumer is not going to give you more money.
So enter reason one for subscriptipn service. A revenue stream. The Microsoft OS has matured, and regular upgrades are unnecessary. So Microsoft will force them on you, but making subscription services much less expensive than stand-alone software.
Reason number two is that they will get to have an install disk or program on your computer every few years. This install program will comb your computer, find your default settings, and change all computers to using IE as the browser, and Windows Media Player as the Media Player, and make life very difficult if you want to use anything but MSN for an ISP. The more often Microsoft can override default settings, the more network traffic they will control.
This is not a big deal for enterprise customers, because on accounting sheets, the standard practice is to use a 3 year depreciation period for software i.e. every year, you count 1/3 of the cost of software towards the cost of operations for that year - after 3 years, the software is considered "obsolete". Therefore MS's 3 year subscription model makes little difference to most enterprise customers as it merely makes a standard practice a legal requirement.
The software industry needs to be pushed by either customers or congress to accept one or the other. If software companies go to a subscription basis for their software then patents could make it so that certain "technology" is not available in any software currently on the market. If software companies want to patent/copyright their work then they should not be able to place time limits on the usage of the software.
I'm not arguing for or against software patents or copyrights or subscription sales. I'm simply arguing that if software companies want to "force" customers into upgrades through "expired" licenses they should not be able to lock-up the technology and the software for decades.
If Micro$oft doesn't think it can make money on Windows 3.1 anymore what have they got to loose with it going into the public domain? People will still upgrade their systems to the latest OS for the exact same reason that they upgrade their OS now. Those reasons (application availability, cool factor, technical support, etc.) will continue to exist even if the old version written over 10 years ago is in the public domain.
The OS is coming to a maturity and MS is going through a middle-aged crisis. With Win2K, there really isn't a *need* to upgrade anymore. Its stable and simple refinement is all that it needs. So now we are bound to see useless things like 3D GUIs and 3 year licenses.
I think Win2k was the best and worst thing that ever happened to MS. Its a great OS and the end of their revenue stream. What happens when the market saturates with it? There only chance is to push XP as a subscription into the consumer markets where Win2K doesn't have a foothold yet.
More
For the most part, if you ask any run of the mill Joe if he owns the software he bought, he's going to say "yes". The general computing public believes that they own the software they buy, just like other tangible items at the store. THey're not going to go for a fee that has to keep getting renewed. If Microsoft thinks that people are going to want to keep paying for the same software title over and over again, they're nuts.
Exactly. Does everyone remember Circuit City's Divx (not the codec, but the DVD competitor)? It failed miserably for this very reason. Many of the people who purchased Divx players were surprised to discover that they didn't actually own the discs that they had "bought." Circuit City claimed that they weren't able to secure adequate Hollywood support, but it was also quite clear that the consumers overwhelmingly rejected the business model.
This software scheme isn't any different. As anyone who has suffered through providing tech support knows, users will continue to use software forever, or at least long after its useful life cycle. I know people who are still using Office 95, and one guy who is still trying to install Office 4.3 (for Windows 3.1) on his Win2K Pro machine. MS is in for a world of hurt if they're serious about this scheme.
American businesses aren't taxed on assets, they are taxed on income. I'm not sure where you get the idea that it is otherwise. Perhaps you are confused by the popular misconception that there is an *inventory* tax? Inventory is not legally synonomous with asset. Inventory is an asset * specifically held for resale*. The expense on inventory is not deductable as an * expense* until the item is sold, thus making it APPEAR as if inventory were taxed. It isn't, of course. Purchasing inventory is deducted as an expense against income.
Purchasing software is an *expense* and is therefore deductable against income. However, it is a *capital* expense and must be depreciated over a period of years.
Leased items are an *operating* expense and may be deducted in their entirety in the year of the expendature.
What's more even if your view of taxation were correct software STILL wouldn't be an asset. The value of an asset is what it could be SOLD for.
What can you legally sell a used copy of MS Windows for? That's right boys and girls, you can't legally sell it at all, it has ZERO value!
Money spent on software is, to the value of the company, roughly the same as money spent on toilet paper. It is money flushed down the hole that *reduces* the overall value of the company. That's why purchasing is so loath to get you that copy of " Really spiffy shit 2001" that you want so badly.
Leasing software may increase profit in any given year by allowing the full deduction in that year.
Am I going to lease software for my company? Not on your fscking life. I can obtain all the software I need for free.
KFG
From the quoted CNET article:
There is still at least one huge area in which the MS product range could be made better - usability. Instead of concentrating on new bells and whistles, MS would do well IMO to concentrate on fixing the multitude of I-wish-it-didn't-do-that "features".
Perhaps then they might in the process convert people - like me - who are fed up to the back teeth of an OS that only has to be used because (almost) everyone else uses it.
P.S. Typo in the subject line isn't mine ;)
Friends don't let friends use multiple inheritance.
Comment removed based on user account deletion
Companies would like to get the latest software,...
My experience has been that companies would rather standardize and leave it be. You mention 40% of businesses use Office 2k; that means that 60% don't want to upgrade.
Now, instead of paying for it all at once, maybe it'd be nice for them to pay $75/month for three years.
Nope. It's (to use your example) $75/month forever. Any company that decides it wants off the upgrade treadmill still has to continue paying.
I'm not sure why MS thinks this will help them
Just as much as their doing this encourages upgrading to current levels every 3 years, it gives me a chance to re-evaluate my needs and buy elsewhere.
If Office costs $500 and I'm only using 20% of the features, I could decide to not pay the 500 every three years, and look elsewhere.
Especially if Office isn't improving, only shifting the interface around, why should I sign up for the $1500 over three years plan?
Even if other suites go to this (Corel, Lotus (yes, I still count Corel)) they'll be cheaper overall and just as functional.
And if Star/OpenOffice improves in stability, speed, and compatibility, I'll be set anyways. (right now, star is unusable for me. too slow, and incompatible when saving to word with graphics in a document.)
AbiWord doesn't do badly either, but it has a ways to go- I'd like to see all of the menus activated, for one thing.
A host is a host from coast to coast, but no one uses a host that's close
Bonus : If worst comes to worst you're even able to pull off your threat
Setup: When the very junior M$ sales droid comes in delivering his blackma^H^H^H^H^H^H^Hsales pitch, get nasty, kick him out and make very, very clear that you won't negotiate with anybody less then the boss of his boss.
In the meantime: Set up a really nice Linux box, focus on the desktop (enlightenment is nice), make sure that you can demo the whole range of Open Office apps; specifically conversions from M$ Office documents. Install the Opera browser and a few other nifty add ons, preferrably stuff that looks better then under Windows.
Next: State clearly that this is your corporate desktop prototype that will be ready in three month and will be replacing all M$ shit! Make it very clear that you where just waiting for them to set totally unreasonable conditions until it's worthwile to scrap M$ entirely.
Wait for reasonable and cheaper offer from M$ to come in.
ich bin der musikant
mit taschenrechner in der hand
kraftwerk
MS is leasing software so that companies don't have to claim it as an asset, hence they don't pay as many taxes. Leased assets are even a tax deduction in most places.
I'm sure somebody who knows more about this will step in and correct me if I'm wrong. I welcome that.
Keeping
Why should I have to pay for software twice, eh?
Well..
A quick run down of the software I'm using at the moment has shown me that all of it is under 3 years old, with the exception of a couple of NT servers. The idea that people will have to carry on paying for software years after they've bought it isn't new (Ask any Sun/SGI/Oracle user). This sort of thing pushes people into paying more money for software, true, but it also means they're considerably more likely to use more up-to-date versions, have less support/maintainance issues, and generally be happier.
Sure, it'll never work for the home user, but that's not what they're aiming at.
http://twitter.com/onion2k
I think you have hit the nail on the head. I am sure that removing the ability to pirate software will bring down Microsoft. Here in the UK I have often been to offices and tried to fix a network problem, asked the guys in the office if they have a Windows 98 machine to be told, "no, but I think we have a Windows 95 CD somewhere." You then realise they are illegally running 20-30 machines in their office. This is just so common.
If people can no longer pirate the software so easily then people will seek alternatives. Whats more, non-Western countries will be even harder hit. I have been to may countries in Asia and the Middle East where it is very difficult to buy orignals. I once went into a computer shop in Pakistan whilst on a contract there. I asked them for a Windows 98 CD and they came with a pirate. I asked them for an original and they said they don't sell the originals.
In short, people just can't afford to pay for original software. I am sure everyone out their has copied some software illegally at some point.
perl -e 'print $i=pack(c5, (41*2), sqrt(7056), (unpack(c,H)-2), oct(115), 10);'
during a computer crash your soundcard detected the words "Damn microsoft". This is not allowed by the contract you have signed with microsoft. This seems like a great violation of the license, and Microsoft is forced to take action.
Your agreement with microsoft has hereby been cancelled. You are allowed to use this software for another month, after that time it will self destruct.
We hope that you in the future will help us promoting the wonderful world of Microsoft programs, and not ever again curse windows for crashing.
You might apply for a new contract after 12 months
As someone who works in a small business, I must disagree with you - I think that subscriptions are more likely to appeal to large companies. The reason is, in a small company (ours at any rate), a lot of the software that gets used is only used fairly intermittently - sometimes a piece of software only needs to be "pulled off the shelf" maybe once or twice a year. For example, we developed a Windows CE application for a client. That requires the Windows CE toolkit. The project has long since been delivered, but needs the odd bit of maintenance maybe once or twice a year for a day or two. This may be even less frequent in the years to come. Subscription would be deadly. Do we keep subscribed and pay continually for software we essentially don't use, just because we once in a while need to fix some tiny bug? What if we don't need to use the software for the next five years, but then suddenly need to? Do we resubscribe if we've unsubscribed? Chances are the version we used won't even be compatible anymore. Right now its easy - I have a hard disk with the toolkit installed and when I need to do maintenance, I just plug it in and go. Under subscription, I would most likely have to download the new version, and spend days (possibly weeks) trying to just get my project to compile.
A lot of other software is also used far more sporadically than it would be in a large company. We have a legit copy of Adobe photoshop, for example, for doing the company web page. But we only update the company web page two or three times a year maybe. The rest of the time the software is not being used. Should we pay every month we don't use it? What if we stop our subscription for some reason, but need to open the .psd files six months later for some reason? At least with "owned" software, you just reinstall the software and open the documents, no problem.
What if I have some personal documents saved in some format, but don't actively use the software anymore? What if I want to open those documents ten years from now? Do I shell out for a new subscription? I'm sure most of us have documents backed up on CDs from years ago for software we don't really use anymore.
Lets face it, the only groups who will find the subscription model appealing are the application providers. They are the only ones who will greatly benefit from the model, and the only reason they'll be able to push it on people in the medium term is that currently the software industry is controlled by the vendors, not the clients, i.e. "what Microsoft says, goes".
In the Enterprise world, I'm currently faced with searching for a "sales force automation" tool. I've researched about 30 different providers, and the ones that offer a truly Enterprise level software package all seem to be selling them with yearly renewable licenses.... nothing more, nothing less. They are guaranteeing upgrades at least every 12 months, and free phone support for 10 hours a month in general, some more... some less. Most ASP's operate this way as well. Something I remember being offered by one provider was the option to purchase the source code for 4 times the yeary operating license fee, if the company goes out of business... Anyone thing Microsoft will offer this?