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.

Comments

OMG!

[Anonymous Coward]

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. ;)

Re:OMG!

[Schwartzboy]

Thought it was MS, never mind, my bad. ;)

Okay, okay, just RTFB (blurb) already. Not only does it refer to "Sun", which is a bringer of light and all things good and shiny, which is obviously anti-MS, but the /. blurb also claims that the licensing is $100 per employee. If it were an MS strategy, there'd be some extra zeroes...either that, or it'd be $150 per to start and $100 per "essential patch", plus complete ownership of any and all works produced by any users, authorized or not, while using the system. Duh.
Seriously, this doesn't seem like such a horrendous idea in and of itself, but I wonder if there are any companies x such that y number of users within the organization will not want to/be able to switch, or be required to run, say, Mac OSX on lime-green iThingies because they're tied to some Mac-only apps. Would companies still be charged per-employee in that case? Still a very good deal I'd argue, if said employees were in a significant minority, but some CTO out there might not like his $50K quarterly bonus being eaten into to the tune of $699...er, $700 for that handful of marketing drones. I'm sure that a question like this will pop up eventually, or not.

Re:OMG!

[elmegil]

Keep in mind that it appears to cover more than just 'license fees'. The announce I saw mentioned service contracts as well. Go find a service quote from Sun and see how it compares to that $100,000.

Great idea for schooling!

[stev3]

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.

You can't make money by giving stuff away

[192939495969798999]

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!

Re:You can't make money by giving stuff away

[tedgyz]

Ummmm. The last time we tried to buy some Sun servers, they were pretty freakin' expen$ive! If you aren't turning a profit off $1M systems, then you have too much dead-weight. That's what happened to DEC - too many chiefs and not enough rowers.

Re:You can't make money by giving stuff away

[pmz]

If I spend $500,000 on a server with the hardware to support 4000 users, I damn sure dont want to spend another 400,000 dollars on licensing (basically nothing, air, a slip of paper).

Er, you just provided for a 4000 employee company with under a million dollars of hardware and software. What is your complaint, again?

Re:You can't make money by giving stuff away

[pmz]

No, I provided for a SERVER. Now I get the joy of spending $270 or so for a operating system for each PC...

You forego that $270 by choosing Linux or, now, Sun's Java Desktop ($50/employee above server costs).

The whole point to what Sun is doing is removing Microsoft almost entirely from the equation while putting Sun in at a lower cost. It is actually about time for a solid competitor to come forward to put Microsoft into place.

We will know Sun was successful when Microsoft lowers their pricing to match. So, if you choose, you can still get Windows XP--but for 1/3 the price!

The cost to the vendor is a whole frikin 60 cents to burn a CD

You are forgetting the R&D investment for the contents of that CD.

It isnt costing a vendor any more to have more end users access their server once its at the customer site, so why the hell do they think they are entitled to more cash?!!?

It's a licensing scheme that Sun is betting some customers will find acceptible. The key word is "bet". There is no risk-free move in business, but I think Sun is putting forth a good effort, regardless.

Re:You can't make money by giving stuff away

[dublin]

If Sun wishes to make money the very first thing they have to do is make a true and honest assessment on the state of the market and their place in it.

For all the brilliant minds that Sun has had under their roof over the years this is the one thing that they seem completely unable to do.

Believe me, they have. I just finished watching the live video of MacNealy and Scwhartz describing the new setup, and let me tell you - it is compelling.

Not only is it significantly cheaper than the Microsoft alternative, but Sun is rolling up absolutely all the network services enterprises really need into the deal - no piecemeal approach, no more wondering if this app server is compatible with that version of the mail backbone or whatever version of the operating system. Everything is integrated and tested to work together as a complete integrated, secure, and reliable system - desktops and servers, Linux or Solaris - it will just work. (And yes, I actually think they can pull this off - they already have most of the pieces in place, so it really just takes focus and execution. Focus is now a given - I'll reserve judgment on execution...)

This is the way we *should* have been doing IT for years, but no, we still spend way too much of our time doing system administration and in-house integration just to get the basics running.

Sun's approach will dramatically cut the cost of providing the basic infrastructure services that are the foundation for the interesting stuff. Garden variety systems administration *should* go away - and smart companies will see the potential to cast off the expensive shackles of today's current environment for a far more affordable and open future.

Anyone who believes in the strength of the network approach to delivering services can only applaud Sun's announcement today - I wish them the best in the market. This is an idea whose time has come, and it is definitely the way that Linux will start to make inroads against Microsoft in real-world business environments. Linux alone had no chance - Linux with Solaris, a complete set of services, all for a very affordable price, can hardly lose.

Re:You can't make money by giving stuff away

[anonymous loser]

If I spend $500,000 on a server with the hardware to support 4000 users, I damn sure dont want to spend another 400,000 dollars on licensing (basically nothing, air, a slip of paper).

And that's why you're not an IT manager. You see, hardware is pretty damn useless without the appropriate software to run on it. There are 2 ways to get that software:

• Write it yourself - a great idea except you have to invest hundreds of thousands of dollars to do this, as well as pay all those developers to continue supporting the software for as long as it's being used. Oh, and while it's being initially developed, of course, you're still stuck with lumps of useless hardware even though you're shelling out tens of thousands of dollars every month to develop something that will run on it.
• Buy or lease software from a commercial vendor, like Sun. Unlike the IT manager, they have more than one customer that wants this kind of software. So, their development and support costs are amortized, and they can charge less per user than it costs you to develop and support it internally. And there's also the added benefit of having all those employees that would have been stuck developing your internal application now being free to work on more useful things, like whatever products your company actually sells.

I guess the other "option" is hoping that there is already an open source/free project that exactly matches your company's needs. There aren't too many of those that I am aware of, aside from the major OS projects (i.e. Linux), Apache, Samba, and a few development tools. And many companies do take advantage of these projects when they exist. But most of the time such a project does not exist, and you're stuck with the options I've outlined above.

not as MS-ish as it sounds

[jbellis]

We're all familiar with a certain Redmond-based company's efforts to extort more money from corporate desktop clients with a strategy like this. But, if you read the article, Sun isn't forcing you into this if you don't think it makes sense for you:

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.

All Employees

[RazzleFrog]

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?

Re:All Employees

[OscarGunther]

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.

No problem. Companies in your scenario would opt to use traditional pricing instead. Sun is making a statement about its desired role in the IT food chain (as an integrator), without relinquishing its position as a parts supplier.

I can see how headcount pricing would encourage a company to move everyone onto the platform. As long as you're paying for it, why not have everyone use it and bring down the per-seat cost as close to $100 as possible? And the price point presumably undercuts Microsoft's bundle. So, IT wins by reducing the cost of infrastructure and Sun wins by increasing revenue and market share.

Anyway, that's Sun's story. It's true, as someone else noted, that a Linux integrator can offer the same stack for $100 per seat less than Sun. I imagine Sun's response would be that (1) they're stack is better integrated than the comparable Linux stack and (2) they don't have an ulterior motive in trying to sell you consulting services for support. (Those of you who deal with Sun can tell me if the latter point is accurate.)

And I quote,

[EdMack]

"would reap big savings from what he called the "happy meal" approach."

Does this mean a free toy for every third employee? Yay!

Only and underdog could use this pricing strategy

[gojomo]

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.

GPL'ed Version vs. Sun's Package

[reporter]

The announcement by Sun almost begs the following question. Does anyone have a comparison of the new Sun package and the equivalent software under GPL (GNU Public License)? The latter is free, but the former is not. Is the former a sufficiently big improvement over the latter to justify a charge of $100 per employee.

Most Web servers run Apache. You can get a more expensive web server from Sun, but does it have a significant advantage over Apache?

... from the desk of the reporter

Re:Sun needs your mon

[molarmass192]

I hate to break it to you but if Sun had imposed runtime license fees on Java, it would have died a quick death from the start. Sun does make money from Java and it's primarily from certifications to use various Java labels like "J2EE" and "Pure Java". They also make money on books and J2ME runtime licenses.

Re:StarOffice price increase

[Sylvius]

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.

Far out!

[r_j_prahad]

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.

So let me get this straight....

[Lord_Dweomer]

If I had a company with a janitor on the payroll....I'd have to pony up $100 to Sun for him because he's an employee? No thanks. At least they're not shooting themselves in the foot because they're still offering their old pricing plan.

What happened?

[ad0gg]

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.

Re:What happened?

[192939495969798999]

Required response: That would work, except I don't want to support software, I just want to write it and then run far, far away. :)

Just like Debian's 24/7 support!

[nurb432]

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..

Re:StarOffice price increase

[4of12]

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.

Sounds like a gold mine to me...

[cybrthng]

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 :)

Sounds good

[Erwos]

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

Cool pricing for low headcount startups

[ubeans]

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.

Re:what about contractors?

[IM6100]

I wasn't aware that Dell was a good example of a potential big Sun customer.

Sun MMORPG

[CHaN_316]

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!