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Sun Tries Subscription Software Pricing
Sequoia writes "According to this article, 'The company's new pricing model for its systems will be based on a company's employee count, as declared in a company's annual filings with government regulators. Sun will charge $100 an employee for a single package that includes an application server, a Web portal and security software, among other components -- all of which Sun executives say will work together in a more integrated fashion than they did previously.'" Sun's press information is a little more informative.
Sun to Introduce New Pricing Strategy for Its Software
By LAURIE J. FLYNN
SAN FRANCISCO, Sept. 15 -- Sun Microsystems, a supplier of network computers, will announce on Tuesday a new approach to selling its products and software. The company, whose network computers are based on proprietary technology, has been losing business in recent years to servers based on lower-priced personal computers.
Its executives hope that the new strategy -- substantially reducing the price of Sun's network software for many customers while simplifying the way it is purchased -- will help the company regain its diminishing market position.
The program is also central to Sun's effort to portray itself as a supplier of integrated software and computers that are more efficient for corporate users.
"We are a systems company, not a hardware company," said John Loiacono, vice president for operating platforms at Sun, of Santa Clara, Calif. "We're trying to build the best cars, not the best tires."
The company's new pricing model for its systems will be based on a company's employee count, as declared in a company's annual filings with government regulators. Sun will charge $100 an employee for a single package that includes an application server, a Web portal and security software, among other components -- all of which Sun executives say will work together in a more integrated fashion than they did previously.
The company's executives said their streamlined pricing could offer significant savings for large companies that in the past paid more under traditional pricing schemes.
Mr. Loiacono said Sun would continue to sell individual pieces of the server package, but that most companies would reap big savings from what he called the "happy meal" approach.
Sun's pricing strategy moves away from the common industry method that typically considers complex factors like the number of network processors, a network's storage capacity and even the size of a company's customer base. Those many variables can make it hard for any corporation to predict what its software licensing fee will be in a given quarter, Mr. Loiacono said. Sun's all-in-one pricing, he noted, gives corporate customers more predictability.
"What Sun is doing is being very open about what its pricing is, and that is very revolutionary in the high-end enterprise market," said Shawn Willett, principal analyst at Current Analysis, a technology market research company based in Sterling, Va. Mr. Willett said that quite often software pricing is the subject of negotiations conducted in secret. Sun, he said, is hoping that "putting everything together in a stack for one price will make more companies buy all of it."
As part of the business software package, Sun is also announcing new desktop software that allows employees to connect to the company's servers. The price for that software will be $50 a employee, provided the corporate purchaser is running the software on Sun's Java Enterprise Server system. Companies that want to run Sun's desktop software on a different server system will be charged $100 an employee, the company said.
Also central to Sun's repositioning strategy is a new version of its StarOffice software suite that features an easy-to-use interface resembling that of Microsoft Office, but unlike the Microsoft product, can run on many operating systems. The Sun software, which runs on Linux and Windows as well as Sun's Solaris, will allow word processing, spreadsheet and graphics programs to work more efficiently together, said Curtis Sasaki, Sun's vice president for desktop engineering software.
The idea is to make it easier for customers to switch from the Microsoft software to Sun's products. "We're trying to make it easy for enterprise customers to move without relearning much," he said.
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Orppf urp mf y.ppcxn. yflcbi otcnnov C am yflcbi yr n.apb Ekrpatv (Dvorak -> Qwerty)
Although I hate to pay another fee, it's ridiculous that Sun can't make some money from all the Java development that goes on. Heaven knows their stock needs the influx of cash.
This is horrible! It will never work! This is the worst thing to hap....oh wait, you said Sun, didn't you? Thought it was MS, never mind, my bad. ;)
I think it would be great if a company would set a flat rate per-child for public and/or private schools. Ex: $300 per student for (x) amount of machines, (x) software licenses, (x) amount of time with support and upgrades.
I think a lot of school districts would jump at this idea because it will give them a total cost, instead of having to "guesstimate" at what all the hardware will cost, and the number of people they would have to hire to support systems etc.
Fire everybody and hire them back as paid consultants!
My rights don't need management.
I think Sun may be one of the last companies to realiza that giving a product away doesn't make you any money. I work for Sun, and let me tell you, they are a great bunch of engineers. However, their ability to turn those awesome engineering projects into cash is limited at best. Perhaps if they start charging some serious money for stuff, then things will change. Let's hope that Sun can get back on track!
stuff |
This ad is all over Slashdot today.
What's interesting is that it is based on the number of employees per the company's annual report and not based on actual users. I would imagine that companies with large workforces that don't actually go anywhere near a computer would lose out on a deal like this. Manufacturing companies come to mind. I work for a company of 1700 employees. That means $170,000 in license fees. Anybody know what that would hav translate to under the old scheme?
Or do Sun believe they scale infinitely?
MSDOS: 20+ years without remote hole in the default install
You mean I can get a personal copy of all Sun goodies for a mere $100? Here I come!
What happens in an enterprise when a department wants to try out SunONE App Server? They have to pay for their whole company? Easier to get JBOSS/Weblogic/Websphere.
Of course when Sun has got in the door it is easy for departments to choose SunONE App Server becasue it is essentially free.
Read Epic the first RPG novel.
OSNews has a preview of Sun Linux and the info about the 3D desktop.
Does this mean a free toy for every third employee? Yay!
puts ("Python r0cks\n");
If Sun were ever to be in a dominant market position, this sort of "bundling" would likely be considered actionably anticompetitive, like the MS OEM licenses which charged PC makers for every PC shipped, whether it had an MS OS or not.
Most Web servers run Apache. You can get a more expensive web server from Sun, but does it have a significant advantage over Apache?
I remember reading an interview with Scott where he said giving away StarOffice was killing it. CIOs were too nervous to do company-wide transition to a free office suite because they feared that Sun could just abandon it/stop supporting it on a whim. Hence, the spin-off of OpenOffice. By charging an nominal amount (comapred to MS Office) for StarOffice, Sun has given it a "corporate legitimacy" that gives IT departments reassurance that Sun is committed to supporting it.
They are both great products, they are both far cheaper than MS Office, but they appeal to different groups with different needs, so one won't kill the other.
I think this strategy of a "predictable" pricing is not going to work for software, esp. this late in the game of the battle of the Operating systems for desktops and severs.
In software, there are many factors that have to be considered before you buy it. And software is not individualistic like music, but has to work with the software of others in and out of your ecosystem. Therein lies the biggest hurdle for getting enough traction.
Simplistic pricing is just one factor to be considered in the evaluation. Sun is essentially betting that there is a segment of the market that is so perturbed by the M$ pricing that they will switch to Sun - even though the fact is that Sun may turn out to be more monopolistic that M$ if given a chance. Look at all the song and dance, and smoke and mirrors, Sun did when Java was young and had tremendous potential .....
My gut feeling is that people would see Superman McNealy for who he is .. just another closet Bill Gates.
To see a world in a grain of sand, and then to step back and see the beach where the sand lies
This could be great news for my 501(c)(3) non-profit customer who technically has zero employees; there is nobody on the payroll, they are all volunteers by definition. I haven't read the whole of the offer yet, so I do not know if they are giving Solaris away for free or not. And anyway my non-profit site is happy with Linux, so free Solaris is not going to save them an appreciable amount of money. But when your revenue stream is primarily pocket change, every penny counts.
Buy Steampunk Clothing Online!
This is slashdot, people are supposed to mod when people say anything about charging for software. Everything should be free, we'll all suppose make our living doing support for the software.
Have you ever been to a turkish prison?
Everyone is quick to say "won't work" about Sun's proposal. But just think what the world would be like if RIAA ran things - if there were a "Technology Industry Association" (TIA) levying fees on behalf of all the tech companies.
Every living human would be assessed $500 a year for tech use. Then charged a royalty everytime he turned on a machine of any type, opened any software, printed, etc. Of that, somewhere between 1% and 5% would be divided up amongst all the software companies and the rest would be used by TIA to sue people who looked over someone's shoulder to read a website or xeroxed a printout.
Enough to give one a small stroke, eh?
computerlady - a brand new Slash-daughter - alone, but no longer invisible, in the
Oh, and their hardware server platforms.. and their workstations....
Sure that is a bit sarcastic, but I think I made my point.
Not detracting from what Debian is, they are just different.. for a different audience..
---- Booth was a patriot ----
They used Google as an example. 1000 people, $100/employee/yr yields $100,000/yr for the whole software stack. So wearing my manager hat that is just 2 FTE.
The alternatives (like IIS and Websphere) are interested in licensing by connected person.
So this is yet one more way to license the products sun sells. This also is a major feeder to startups. Near zero software costs for small firms.
-- Multics
how will they kill OpenOffice?
They won't.
They'll leverage it.
The first thing people discover with OpenOffice is that it's about 95% * Office97.
There are enough remaining compatibility issues with MS' products and the problem of not having the same full suite of good work-alike fonts that Sun and other vendors like Ximian - er - Novell - have been addressing.
I sympathize with Sun. I've used their products on the desktop since the mid 1980's, but these days a Linux box is on my desktop and Suns sit back in the server room. It's only a matter of time before their role there is commoditised, because that's the direction everything is going.
Whatever computer desktop exists in the future, it's going to cost less than the desktop that exists now. That has stark implications in terms of the profit margin that companies like Sun or Microsoft can hope to drum up.
In this kind of environment it's difficult for IT companies that need to find new markets where they can truly offer a value-added product.
If I were Sun, I'd be looking into embedded devices. What were servers 10-15 years ago will soon be cheap enough to buy at Walmart in a blister pack. Perhaps Jini was before its time, but the idea is correct - software for networking devices that discover their environment easily and, hopefully, securely.
"Provided by the management for your protection."
Coming from a sysadmin trying to manage an infrastructure, a turn-key solution like this from sun is a HUGE bargain.
:)
We pay more in PER USER fees for a standard Application server environment than what Sun wants for the entire "shebang".
For small businesses who focus on unix solutions i couldn't imagine a better way to "enterprise" your business.
Pushing this will push java, will push sun hardware, will push sun certified solutions, will push logo branding, will push certifications and that will push the company forward.
PS, I do have a few V880's, 280r's, Netra X1's, V240's and lots of other sun equipment. So this is good news
This is how it's supposed to work: the business says, "you can have it all for X price, or you can have the individual components for Y and Z prices individually." The consumer picks what's best. Everyone's happy.
It's not often that I praise Sun, but if they do what they're saying, they've given everyone a good deal. Nice job!
-Erwos
Plausible conjecture should not be misrepresented as proof positive.
Anyone who's worked for Dell knows that anyone in a grunt position (tech support, sales, customer support, etc.) starts out as an employee of a contracting company (these days it's Spherion). do these employees count? they're not employees of dell (for example).
Please switch to pen, paper and a hard-wired calculating device for all of your computing needs.
Here is an unrelated link
I am TheRaven on Soylent News
Say I want to start up a new company with two of my friends (all Java developers), and let's suppose we want to innovate and build the next killer app. First we need to write a proof of concept in order to show it to venture capitalists in order to secure an initial round of funding for the project; we need development tools, an application server, etc. but we're living off a shoestring budget.
Sun proposes a full suite of enterprise apps and development tools including limited support for 300$ per year? Wow, I'll jump on this offer, thank you very much. And when we'll sell the solution to our customers, we'll be happy to sell it along with some Sun hardware to match.
Do you think McDonalds would be paying $100 a head for every zit faced teenager asking "da ja' want fries wit' that?" in every company owned location if they want one Sun system?
McDonalds is a franchise-based system. McDonalds Corporation itself is mostly people who work in offices or warehouses. The people working at the actual hamburger stands are employees of whatever small/medium-sized company has a franchise with McDonalds.
A Good Intro to NetBS
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Sun is much less evil than most people try to make them out to be.
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I agree, but they have to thank themselves for the animosity of OSS people.
If they could make Scott McNealy shut his big mouth for six months, they woud be amazed at the results.
Nevertheless, I reckon this is not going to happen, because the guy seems to be a pathological attention beggar.
Cheers,
Wow..... Sun is announcing a pay to play scheme. This is great! It's a MMORPG right? This MMORPG is only charging $100/year per player, which is a pretty good deal, that's only $8.33 a month!
I hear this MMORPG is also skills based and they have many classes of character you could become. You can be tech-support, end user, programmer, system administrator, clueless user, and many more! This is going to be great!
"There is no spoon." - The Matrix
I asked my friends in other companies and people in mail-lists - the situation is always the same. And it's sad to compare IBM RS6K and HPPA equipment - people working with it are surpised hearing our statistics and complains.
It doesn't have to be THAT expensive if it's not more reliable than Intel same-performance servers. Or it doesn't have to be THAT unreliable for THAT price ans speed. Hmm, i am not sure if I need faster, but still expensive and THAT unreliable servers.
Less is more !