Microsoft Testing "Pay-As-You-Go" Software

seriouslywtf writes "Microsoft has quietly rolled out a pay-as-you-go software system in a few countries (South Africa, Mexico, and Romania) to test out how the public reacts to software rentals. Part of the current service includes a ~$15 fee per month to use Office 2003. If the service goes over well, Microsoft is considering extending the program to include other software or other countries. From the article: 'Are we moving towards a rental model for software? Despite the success of programs like Software Assurance, and the FlexGo program, it doesn't seem as if the traditional model of software sales is ever going to go away. Consumers still like the option of buying complete software packages. However, for places where the price of software keeps obtaining legitimate versions out of most people's reach, a rental program may be a useful alternative.'"

Comments

Microsoft vs. Google

[Anonymous Coward]

And it begins...

Re:Microsoft vs. Google

[Anonymous Coward]

WTF do you think "Live" is for? Windows Live, its already begun with 1) activation / or deactivation and 2) Windows Fista with its add-on's and so on. Just look at the Billing options on their consumer IM clients.

Developing countries need to use Open Office not MS Office. Blowing money on MS OFfice was bad enough but now monthly rent? Its going to be MORE expensive and that most likely includes the lastest releases which also means having to upgrade HARDWARE which means more money being spend than they need.

Latin America has the right idea by using free software, the rest of the world needs to follow suit.

Anyway, while we are on the subject of "live" software, there is alot of software that doesnt need custom client window's they can quite easily use a web browser as a container with async javascript.

Re:Microsoft vs. Google

[PFI_Optix]

...and ends quickly if they stick with $15 a month for Office.

I can walk into Wal-Mart and buy the student/teacher edition for $150, and that includes the msot commonly-used Office components. Regardless of the edition, they could "rent" for two years and spend the retail cost of the product. I'd rather spend the money up front and consider it a money-saving investment.

Re:Microsoft vs. Google

[networkBoy]

I would say that if the price was $0.50 per day I may consider it at home.
Many days I don't touch anything office related, but on a monthly granularity I do.
Thus if I could buy 30 days of office for $15, but those days were not forced to be sequential then sure I'd consider it.
Of course google is free for the "home" version right?
-nB

Re:Microsoft vs. Google

[cheater512]

You call buying Microsoft products a money saving investment?

Re:Microsoft vs. Google

[tsm_sf]

Or you could simply download the cracked version and never have to worry about a constant stream of micropayments from your account, whether or not your software can phone home, or any of the other bullshit.

For all the flak they seem to catch, it's interesting to note that pirates want nothing but to make my life easier.

Re:Microsoft vs. Google

[networkBoy]

That may be, but there are those who want to be legal, mainly because their livelyhood is based on their computer.
-nB

what about my data?

[yagu]

What about my data? If I agree to a "pay as you go" software model, will you allow me to create documents, data, etc., in an open format guaranteeing me free access at anytime I decide not to continue the subscription?

Will you guarantee data and documents I create can be looked at and used in other applications? What if my friends aren't subscribers?

Will you offer different levels of subscription, e.g., allow me to opt in for subscription at a lower rate for reduced features?

From the article:

In the early days of personal computer software, the concept of renting software was met with public outrage, as users worried that they would no longer be able to own their software. However, in the age of the Internet, cellular phones, and multiplayer online games, the concept of paying monthly fees for software has become less abhorrent. Microsoft's Software Assurance program, where users pay a yearly fee in order to always get the most up-to-date version of Microsoft products, could be considered a software rental program.

I don't happen to agree with the articles inference that "paying monthly fees..., has become less abhorrent." I find it still mostly abhorrent, but rampant. The fact that it is everywhere indicates control of the market more than it indicates consumer-oriented services. When a population of users unshackled from monopoly-offered "pricing packages" and schemes freely endorse a paradigm, fine. Until then, I'm not convinced pay-as-you-go is desirable, or even makes sense.

I've not talked with many people who are happy with pay-as-you-go. This seems mostly because pay-as-you-go is usually more synonymous with "commit-to-a-locked-in-contract" for time frames longer than the current technology obsolesence cycles. That's not fair, and as the phone companies edge ever closer to becoming one company again (a la AT&T circa 1983), it's likely to not even be legal.

Microsoft stands to gain huge financials in the same way if they can pull it off, but better still for them they, much as the phone companies do, will have a better customer lock-in. Hopefully, the market will choose not to pay-as-they-go.

Re:what about my data?

[paeanblack]

What about my data? If I agree to a "pay as you go" software model, will you allow me to create documents, data, etc., in an open format guaranteeing me free access at anytime I decide not to continue the subscription?

That's the idea behind pay-as-you-go.

As you go to another product, be prepared to pay.

Re:what about my data?

[nmb3000]

guaranteeing me free access at anytime I decide not to continue the subscription?

As an aside, several Office products have free viewers available:

Word
Excel
PowerPoint
A Publisher option

If you use Outlook or Access, you should be prepared to pay the "price" associated with proprietary formats. It's one of those "no duh" given things that people usually accept. If you use Adobe's products, then you deal with their proprietary formats. Companies use these formats for a number of reasons, partially for efficiency and partially for extendability (and of course partially to lock you in to using their software).

Open formats are an interesting idea, but it's not worth griping about if you choose to use software that you know doesn't support them. It's stupid to assume that everyone will support everyone else's formats. If you are so worried about 100% coverage and support, stick to plain text files (and none of that fancy Unicode. I want to read it in Notepad!)

This has nothing to do with "renting" software. Your tirade is about open document standards, and that's off-topic and for another discussion.

Re:what about my data?

[Jhon]

What about my data? If I agree to a "pay as you go" software model, will you allow me to create documents, data, etc., in an open format guaranteeing me free access at anytime I decide not to continue the subscription?

You could always get MSs free word viewer... or their free PowerPoint viewer... or their free excel viewer.

Assuming it doesn't put some type of "rental flag" in the file which prevents it from working with the free viewers MS makes available.

Re:what about my data?

[644bd346996]

What about my data? If I agree to a "pay as you go" software model, will you allow me to create documents, data, etc., in an open format guaranteeing me free access at anytime I decide not to continue the subscription?

You could always get MSs free word viewer... or their free PowerPoint viewer... or their free excel viewer. And for those of us not running Windows? Being able to use a viewer doesn't remove the vendor lock-in anymore than running 'strings' on a .doc does. Free PDF viewers work because few users have any reason to edit the PDFs - thats why they are made into PDFs in the first place. You can never assume that a user will not want to change or update one of their own documents. Free access to your own files means being able to do things with them beyond just looking at them.

And the idea of a spreadsheet where you can't update the data and recalculate is absurd.

Re:what about my data?

[Zephyros]

There's a difference between a viewer and an editor, and that's just what the parent's looking for as far as I can tell - data portability, not just readability.

Re:what about my data?

[MindStalker]

I've not talked with many people who are happy with pay-as-you-go.

I know this isn't exactly what your talking about but with the FSU tie my employer has we get SPSS (normally a $900+ purchase) per computer for $25 a year. You simply can't beat that with a dirty stick. And each year we get the newest version if we want. Of course thats just what FSU gets because it buys in such bulk, most universities pay close to $100 a year.
Now MS.. thinking that near third world markets will pay $15 a month = $180 a year for office when its highly pirated in such places is laughable at best.

Re:what about my data?

[Jhon]

Uh... if you're not running windows, I doubt you'll have need of renting office 2003, m'kay?

If you're not running windows, maybe this article is of no interest to you, m'kay?

Re:what about my data?

[value_added]

What about my data? ... Will you guarantee ... Will you offer ...

That would be set forth in the license, wouldn't it? And TFA doesn't provide any details as to what form it would take, not that many of us could stomach reading through more than a few lines of what comes out of Microsoft's legal department without our eyes glazing over and a nasty fluid filling the back of our throats.

Put another way, and at the risk of making it sound more palatable than it is, we're not talking a purchase v. rental model, but instead, we're talking about a new form of licensing.

The article submitter's suggestion that:

Consumers still like the option of buying complete software packages.

is misleading, perhaps to the same degree consumers are routinely misled. They're not really buying anything (except for a piece of circular piece of plastic), but licensing a product for their use.

Re:what about my data?

[hiroller]

I've not talked with many people who are happy with pay-as-you-go. This seems mostly because pay-as-you-go is usually more synonymous with "commit-to-a-locked-in-contract" for time frames longer than the current technology obsolesence cycles.

The payment plan is primarily intended for large companies who are already locked into M$ products and I believe it is supposed to allow them to upgrade to the newest products w/o making another large purchase order. These are the companies that are less likely to change over to new products b/c they have established a comfort with using a product with the same general feel and operation (or lack thereof ;) In fact, I used to work for a department of the city I lived in who is actually excited about the idea

Also, and I didn't see it in the article, but from what I understand, the process does not lock you into a contract for that single version of the software but allows for upgrades. However, I don't recall them mentioning a charge for upgrading or an increase in "software rent" but I imagine something of the sort would definately ensue.

Re:what about my data?

[erica_ann]

You could always use a free service like Google Docs to open them?

Re:what about my data?

[Anonymous Coward]

"Office products have free viewers available..."

Yeah, they are great if you already have purchased a Microsoft license of some sort and the new operating system you may get in the future understands what a *.exe is; otherwise, you're SOL.

Re:what about my data?

[misleb]

I don't happen to agree with the articles inference that "paying monthly fees..., has become less abhorrent." I find it still mostly abhorrent, but rampant. The fact that it is everywhere indicates control of the market more than it indicates consumer-oriented services. When a population of users unshackled from monopoly-offered "pricing packages" and schemes freely endorse a paradigm, fine. Until then, I'm not convinced pay-as-you-go is desirable, or even makes sense.

I depends on the contract. But "pay as you go" does imply (to me) that there is no contract. You just pay month to month. So in that sense there i no lock-in except for whatever document formats are used. And that is the case whether you rent or own the software. Also, it should be pointed out that there is some value in always having the most recent version of software. Although in the case of Office, I think that value is minimal. I know plenty of people who still use Office 2000 and it works just fine for them.

-matthew

Re:what about my data?

[MBGMorden]

And if he was at one time running Windows and purchasing this software, but at a later date replaces the PC and switches OS's?

Re:what about my data?

[Jhon]

I would hope the user would have planned ahead and picked a software suite met his needs. Particularly the need to change software suite vendors and OSs at some point in the future. I know I have.

But then again -- isn't this line of reasoning off topic? Isn't the topic the usefulness of "RENTING" office 2003? Not the inability to swap platforms? Someone asked "what if I stop renting -- will I still have access to my files?" or something to that effect. Short answer: Yes -- sort of -- with MS's free viewers.

Re:what about my data?

[zaphod_es]

Yes, as long as you use Windows to run the viewers.

Re:what about my data?

[hotdiggitydawg]

And if he was at one time running Windows and purchasing this software, but at a later date replaces the PC and switches OS's? He should've thought about that before buying Microsoft in the first place. I'm quite happy to bash Microsoft when it is warranted, but c'mon... we all know their modus operandi here. You dance with the devil, you're gonna get burned. You can't blame them for his choice.

Re:what about my data?

[Anonymous Coward]

Two other thoughts on this subject: How long before MS comes out with WGA for Office (oh, and btw, "We don't recognize you - Pay again"?) and "The elegant UDF's (user defined functions) and Marco's you created are now ours to resell as a cost-added extra".

Re:what about my data?

[644bd346996]

And if you use email? And communicate with other people? Eventually, somebody will try to send you an MS Office document. Less common than opening your own documents, but still too common to ignore.

The internet is all about interoperability! World domination ambitions aside, Microsoft doesn't give a hoot about that. And their world domination ambitions definitely give them an incentive to prevent interoperability whenever possible.

Re:what about my data?

[644bd346996]

Your attitude can best be summarized as "We don't want any switchers!" You are part of a shrinking minority of free software users. I recommend you keep that in mind.

Re:what about my data?

[AmberBlackCat]

What about my data? If I agree to a "pay as you go" software model, will you allow me to create documents, data, etc., in an open format guaranteeing me free access at anytime I decide not to continue the subscription?

I guess not, but think of all the fun you'll have squirting your spreadsheets to girls who appreciate math. I'll be looking for your summations.

Re:what about my data?

[init100]

You dance with the devil, you're gonna get burned.

Another version is "If you sleep with the devil, don't be surprised if you wake up in hell". :)

Re:what about my data?

[hotdiggitydawg]

Your attitude can best be summarized as "We don't want any switchers!" You are part of a shrinking minority of free software users. I recommend you keep that in mind. Rather presumptuous (and incorrect) of you... My present employment heavily utilises MS tech and platforms, I have some MS boxen in my network at home, and still I do encourage others to switch to F/OSS. But if switching is a painful process, there's a reason for it. Personally I hope that people associate that pain with coming from a worse position, rather than moving to one, but I can appreciate that is not always the case.

Think about it in business terms - if you were Microsoft, would you want your users switching to other products/platforms? Hell no! Their vendor lock-in practices are bad, no question... but the fact that people in capitalist societies still use MS despite knowing perfectly well what they are getting themselves into is more their own fault than MS's. Take some personal responsibility for your own decisions. If you (as a Slashdot reader) know in advance it is likely to bite you in the ass, and yet you still use it, live with your choice. If you don't like the way it works, don't use it. It really is that simple.

Re:what about my data?

[Dutch Gun]

...but the fact that people in capitalist societies still use MS despite knowing perfectly well what they are getting themselves into is more their own fault than MS's. What exactly are is a company getting themselves into by buying MS Office?

From a pragmatic standpoint: They are getting an extremely popular software suite created by a profitable corporation that they'll have no trouble contracting support or training for. As a bonus, it will be the most compatible with what their clients and partners are using (by virtue of it's dominance in the marketplace). This hardly seems like a risky proposition for a business.

I have no excess love for Microsoft and their strong arm tactics, but some sort of conspiracy theory about how Microsoft is going to somehow lock you out of your data (I mean, it's not like you can't export most documents to text or RTF) is going to turn off more users than an honest discussion about how an alternative product might be a better investment for a company.

Pay as you go sucks.

[thedletterman]

Didn't Microsoft fail miserably with their pay as you go computing model? What's their obsession with this? It's like we already have enough software that's pay as you go, just look at the limited term licenses out there, compatibility issues that require version upgrades, etc.

Re:Pay as you go sucks.

[archen]

If they failed miserably with Open Licensing, then they're still failing - you can still get pretty much all corporate products under the Open Licensing Scheme (and about a billion others).

Re:Pay as you go sucks.

[zCyl]

What's their obsession with this?

Everyone keeps saying, "Why do I need to upgrade when what I have works?" And software companies keep trying to come up with extra little gimmicks to convince people to upgrade, like "Look, now it spell checks words even if you type them backwards." But as software matures, the value of these new features reduces, and thus the potential profit of software companies reduces. A subscription model frees them from this concern, because if they have a subscription model they don't have to worry about producing new stuff. They can just keep charging people for the same old crap.

Renting for businesses

[celardore]

A rental model is good business for both customer and supplier, in some situations, while I personally see it as a bone of contention. In my case, I rent my flat because I cannot afford the capital to buy with UK property prices. If I could get together the money to put down a deposit, I could get a decent mortgage and cheaper monthly outgoings. Because I cannot afford the initial capital, I have to pay a higher price for where I live.

For some businesses, especially startups, it could be beneficial to rent rather than buy outright. Your cashflow would agree if your current turnover is small.

Re:Renting for businesses

[what about]

Yes, renting is "useful" if the cost of the item is big, but this is NOT the case with Wordprocessors/Spreadsheet/Dbase.

Beside Google you could use OpenOffice to do you letter writing/spreadsheet etc.

Also, you are renting since the repayment time of a house in UK now is in the order of 30years, here we are talking of ONE year, so really, this scheme is only good for Microsoft

Re:Renting for businesses

[celardore]

Speaking of rent vs. buy, is it possible to get a mortgage from a UK bank for a home bought in the US? If so, what are your rates over there?

Unless you're wealthy, I doubt it. The bank would find it very hard to justify the management of small overseas property. Remember that the bank effectively owns your house until you're all paid up. Then you've got the exchange rates to deal with, at the moment which being at around 1GBP to 1.95USD do not work in your favour. I have no idea how the banks would deal with over a long term period. To add to this, currently interest rates in the UK are going up and up which makes for more expensive borrowing.

I do work in accounting, but if you were serious about your question, I would ask a professional.

Re:Renting for businesses

[LoofWaffle]

This analogy uses a flawed logic. When you rent your "flat", you are actually paying for something tangible. You never truly know what you are getting into with software because you can't inspect the bits and bytes to determine that the program provides what you specifically need(Sony's rootkit comes to mind here). Also when you buy property you are actually making a long term investment on something that is yours to keep (assuming eminent domain doesn't apply), but when you buy software you are only buying a license to operate, under very strict conditions, said software and you never truly own it. "Renting" office software for a monthly fee is a bit ridiculous IMO. I'm not sure about tax laws in other countries but in the US business owner's can always purchase what they need and write off the expense.

Re:Renting for businesses

[Fishead]

As much as I hate the idea of renting software from Microsoft, is it any better then buying it? What if the yearly total of the rent was about 1/4 the purchase price? Wouldn't it make sense for a company to pay a small monthly fee for each software license then to outright buy it? I mean, it is a bit easier for me to get my tightwad accountant to agree to $15 a month, then to the up front $500 or whateve it is for MsOffice. What if I just don't have the capital to buy a license for every workstation, but the cashflow is there for the rent.

Besides, within a couple years there will be a new version of Office that all my clients are going to be using to send me incompatible files. If I rent, I would presume that I would stay up to date.

Don't get me wrong, I hate the idea of paying rent for a program almost as much as I hate the idea of paying huge dough on a program that I can pretty much get free with Open Office, I just think there is merit to the idea.

Re:Renting for businesses

[fuliginous]

The world of Microsoft software is almost if no actually pay as you go anyway. I don't see any other way of describing paying for something you don't actually own then paying again later to keep using it (upgrade) i some form?

Re:Renting for businesses

[misterhypno]

In my case, I rent my flat because I cannot afford the capital to buy with UK property prices. If I could get together the money to put down a deposit, I could get a decent mortgage and cheaper monthly outgoings. Because I cannot afford the initial capital, I have to pay a higher price for where I live. Great. Now imagine what happens when your rental runs out and you INSTANTLY can no longer access your toiletries, your clothing, your bed, your pets, all of your personal effects and your food, not to mention your telly and the loo (john to the Americans in the audience).

Now imagine that, when you "renew" your "rental" all of these things are now either damaged, gone or disrupted because some strange whirlwind went through your flat and tossed everything about. Call that a "new version upgrade that occurred while you were renewing your rental agreement - and Microsoft does NOT lease older versions of its software..."

Not to mention that you now have to go into your flat and re-install the loo, the telly, the fridge, the sink and the stove...

I think that shows the fallacy of this "brilliant idea" pretty well.

Lee Darrow, C.H.

Re:Renting for businesses

[kbielefe]

Yes, renting is "useful" if the cost of the item is big

Renting is also useful for something that is infrequently used, like a DVD you don't want to buy, or to rent something with different features from the one you own, like a moving truck.

I would like to see software rentals be more like a moving truck rental than an apartment rental. I rent a moving truck when I need to do something my own car can't handle. I'd like to be able to rent a copy of ms office for those rare occasions when my regular word processor isn't compatible with a file I need to use.

Re:Renting for businesses

[jp10558]

But somehow I doubt Microsoft would let me use Office like that. That is, $0.62 a day, maybe 3 times a year... (Assuming $15 a month). I'd have to pay $15 each time, at a minimum, if not actually have some cellphoneish 2 year contract...

1 Year=$180

[morgan_greywolf]

So, we take $15*12=$180. Office 2003 Small Business can be had for as little as $145. If you use Office at least once a month, then 'pay as you go' is simply not cheaper. Yet another example of 'cheaper is not always cheaper.'

Re:1 Year=$180

[jandrese]

That was my thought too. $15/month is way too high for a single application, especially since a lot of people can get discounts (student, through work, etc...) on their copy of Office.

Re:1 Year=$180

[L. VeGas]

This was my first thought. I generally upgrade my main software tools every four years or so. I can't imagine paying $15 per month for this. Certain high price, specialized tools or enterprise software, maybe, but not for a basic office suite when there are so many alternatives.

On a semi-related note, about ten years ago I bought a cable-modem when they were first becoming commonly available for consumers. $200. Everybody else I knew leased theirs for $5 a month. I just replaced it last week. Savings: $400.

Re:1 Year=$180

[canUbeleiveIT]

Exactly. Even though the point is that you don't really pay for the software--you pay for the use of the software--the bottom line is still the bottom line. And most people simply *do not need* MS Office to peck out a letter to grandma or make a spreadsheet for their household budget when there are cheaper/free alternatives.

The only reason most people have MS Office on their box is because they have a pirated/corporate version. When individual users and small businesses have to actually pay for Office, OO will become the standard rather quickly.

Re:1 Year=$180

[hjf]

Erm. People in those countries often make like $100 - $200 a month. You really expect them to pay they whole salary to buy something like Word? Besides, Office 2003 price at least in my country (Argentina) is well over $250, while the average salary is $300 a month.

Maybe you have that kind of money, but we don't, so we usually rely on extended payments to buy "expensive" things. So, if you rent office or if you pay it in 12 payments (the usual), it's going to cost you more than the product, of course (because of the interest rate, which in our economies can be as high as 50% a year).

Finally, it's not easy for people here to have access to a credit card. Most credit cards here give you a limit of about 1 to 1,5 salaries (or less). So you'll basically blowing your whole card to buy Microsoft office? I don't think so. Sure, Visa usually charges much lower interest rates, but you have to pay for it (it costs $50 to $80 a year, in 3 payments, and a $3 surcharge every month. Also you need to earn over $500 a month to qualify for one, which is too much for a LOT of people). So smaller "credit entities" with their own cards are growing at an impressive rate, even considering that they usually have rates of 50% for credit cards and money loans. A bank here offers a "Super-Loan 1000/30: for every 1000 we loan, you pay 30 a month, in 60 payments", which is tricky: at first you may think you end up paying 1800 in 5 years, but it's actually 80 a month what you pay (so you pay 4800 for every 1000 you loan).

I, for example, work on my own. I pay my taxes. I earn well over $2000 a month (that is a lot of money here. Enough to have a nice car and all). But I don't qualify for a credit card: HSBC or Citibank demand that I have at least 3 years on the same job, with that salary, as I am a "company". If I were an employee it would be easier, but as I'm not, I don't have another choice than using my Debit/ATM card (for which I have to pay $5 a month). Which is also blocked for "cardholder non-present" operations (that is, Internet shopping or Telephone). Being that I don't have enough years "in service", I can't either have a checking account, so I can write no checks (not that I need them, we use cash and cards only here, checks are for large operations, and as they are taxed, most large operations are done through electronic funds transfers). Also, to even think of opening a savings account, you need to be 21 years of age.

So, now you can get a picture of why someone would be better off renting office than using it.

Re:1 Year=$180

[amuro98]

I agree for often used applications, this model doesn't work out (for the consumer, that is.)

But what about other applications? I usually find I need to use Partition Magic about once a year. Some time ago, I bought a copy but now find it unable to handle today's larger HDDs, not to mention newer OS's. I paid $60 originally, and upgrading to the latest version would cost me another $50 or so even with the rebate.

I would have rather have the option to rent the program for maybe a day or a week. This way I'd get the latest version without having to pay $50 every few years for something I rarely use.

Re:1 Year=$180

[linxdev]

People in those countries that make $100 - $200 a month should use something free (OO) instead of paying.

Re:1 Year=$180

[cyber-vandal]

Now that would be nice, there are a number of programs that I would only use every so often and paying say £10 for a month's use would be handy.

Re:1 Year=$180

[antispam_ben]

So, we take $15*12=$180. Office 2003 Small Business can be had for as little as $145. If you use Office at least once a month, then 'pay as you go' is simply not cheaper. Yet another example of 'cheaper is not always cheaper.'

Microsoft is glad to get $15 per month rather than $145 total from people who see $145 as "costing too much" or "I can't afford to pay all that money at once." This is the same very profitable business model as TV and appliance rental "services."

Re:1 Year=$180

[cnelzie]

You would be better off downloading OpenOffice.org 2.1 for free and use that for free until the next version of it is released. Don't start up with the BS that it isn't capable, for the majority of Users OpenOffice.org 2.1 is well beyond what they would need, just like MS Office 200x is well beyond what the majority of users need.

Re:1 Year=$180

[Anonymous Coward]

On the other hand 2 cents/hour might be a good deal, if it was technically feasible to bill that way.

Re:1 Year=$180

[hurfy]

The one time where i would recommend a time-limited program or rental be available. And the last place it probably will be because it makes sense to take advantage of instead of getting taken advantage of.....

I hate the whole $50-60 to run Partition Magic or similiar usually one time :(

Re:1 Year=$180

[apathy maybe]

OpenOffice.org can be had for as little as $0. In fact Microsoft products can be too, especially in these sort of places.

Which is sort of the point. They will make it cheaper to "rent" for a time then to actually buy the product outright, in an attempt to stem piracy. It won't work for most, but it might work for some.

Re:1 Year=$180

[danpsmith]

So, we take $15*12=$180. Office 2003 Small Business can be had for as little as $145. If you use Office at least once a month, then 'pay as you go' is simply not cheaper. Yet another example of 'cheaper is not always cheaper.'

Do you think that really matters tho? I mean, you are dealing with a country where Rent-A-Center is seen as a credit card company to some people (as if credit cards weren't draconian enough with interest rates). This is the "we want it now, and we'll pay for it later" nation, it runs from everything to consumer products to the presidential administration. Pay as you go software, if marketed correctly could be a boon for Microsoft. Just imagine, you have a box in walmart with "lease Office 2003 now for only $15!" and have the box itself only cost $15, with payments every month upon installation. The shortsightedness of the average American will see this as cheaper. Such as those who pay to lease a car, buy from the bigbox and then pay minimum payments and get crap from rent-a-center.

Companies have a general knowledge of something that average people seem to not really care about: compounding of interest and overall cost calculations. Most people don't look into the long term costs of things if they can get it on the cheap in the short term.

Back a few years ago, my brother wanted to buy a PS2 but didn't want to save up. He went to rent-a-center and got a contract to buy it eventually given weekly payments. I forget what it was per week, but the sales person quoted him a figure that didn't include interest I guess. He said it was going to cost him like 300-400 dollars, which my brother thought was reasonable given the fact he didn't have the money initially. Then I told him the guy was full of shit and worked it out. If I took the amount of the payment times the length (all you have to do to work something like this out, instead of believing the "4-easy payments of 24.99" salesman) it worked out to like $1,200 for a Playstation 2, just stretched out in small increments over a long period of time.

Big business will always play to the idiot consumer without the good sense to whip out a calculator and work the math out, and it's a good strategy from their angle because most consumers are shortsighted. Given proper marketing, it wouldn't matter how much more subscribing to software would cost consumers in the long run, they see it as a small fee in the short term.

It's the same effect that has people buying $150 dollars of cigarettes a month and wondering why they can't save: they buy them at $5 a pack a day and it seems like a small amount, until you add it up.

Re:1 Year=$180

[George Beech]

But your are not factoring in you have to KEEP paying for it EVERY year.
So let's assume I go and buy office pro 2007 upgrade (who doesn't already have a verion of offce?) - $329
(http://office.microsoft.com/en-us/suites/FX1017 54511033.aspx) No more paying for it ... ever.

now in year one that looks like a great deal, but lets you a general life expectancy of 5-7 year (4 years for a replacement
2003-2007 then 1-3 years to actually upgrade).

In year 5 you would have spent $900 on the software.
In year 6 you would have spent $1080 on the software.
In year 7 you would have spent $1260 on the software.

Looks like a good plan for Microsoft, but does it still look that good to you? Don't be fooled by low monthly numbers.

Re:1 Year=$180

[Wesley Felter]

Except they know that people usually only use Partition Magic occasionally, so they'd set the rental price almost as high as the sale price.

Re:1 Year=$180

[grcumb]

So, we take $15*12=$180. Office 2003 Small Business can be had for as little as $145. If you use Office at least once a month, then 'pay as you go' is simply not cheaper. Yet another example of 'cheaper is not always cheaper.'

Thanks for pointing that out. Now you begin to understand the plight of the poor throughout the world, and why a free market is not sufficient to alleviate poverty in any systematic way.

Terry Pratchett explained it well when he has Watch Commander Sam Vimes contemplate the price of things:

"Take boots, for example. A Captain in the City Watch of Ankh-Morpork earns 38 dollars a month plus allowances. A really good pair of leather boots costs fifty dollars. But an AFFORDABLE pair of boots, which are sort of OK for a season or two and then leak like hell when the cardboard gives out, costs about ten dollars.

"But the thing is that GOOD boots last for years and years. A man who can afford fifty Ankh-Morpork dollars has a pair of boots that'll still be keeping his feet dry in ten years' time, while a poor man who can only afford cheap boots will have spent a hundred dollars on boots in the same time AND STILL HAVE WET FEET."

The problem of predatory companies charging more per unit for smaller units of X exists everywhere in the world. There are good reasons to do so, in some cases. A tube of toothpaste, for example, has a fixed cost (the tube itself) that doesn't vary much no matter how much toothpaste is inside it. But the price gap usually goes far beyond any justifiable level, and represents a significant stumbling block for anyone aspiring to rise from the working poor.

I'm not offering this as an abstract argument, by the way, I've been living and working in a Least Developed Country for the last few years, first as a volunteer, then as a professional with a local firm. I've experienced this problem first hand, and I assure you its effects are insidious and demoralising.

All I have to add to the current discussion is this: 'Welcome, Bill Gates! You're officially a member of the Robber Baron Club. Your predatory business practices that penalise the weak and underprivileged are juxtaposed beautifully with your hand outs to the very people upon whom you prey. You've earned your place in the pantheon of American Captains of Industry. Your name now stands in good stead with the Rockefellers, Carnegies and DuPonts... and with all the leading lights of US corporatism. Ave, Bill! Morituri te salutant!'

Re:1 Year=$180

[Anonymous Coward]

"So, now you can get a picture of why someone would be better off renting office than using it."

No, I still don't get it. If someone earns $150 a month, a $15/month fee is a significant expense. They would need to earn money from using MS Office to justify that cost; otherwise, you could just use Open Office for free. And OO doesn't have/do bla bla doesn't mean squat when you earn $150 per month income. You'd be lucky just to have a computer.

Re:1 Year=$180

[Anonymous Coward]

If I had mod points, you'd have them...

Re:1 Year=$180

[jandrese]

Yeah, and they flat out say on their website that they don't give out any free demos because people only tend to need their product once every couple of years.

IMHO, Partition Magic is way too expensive. The $60 price point means that most people likely pirate it. If it were $10 or $20 I know I would be a lot less reluctant to pay for it (I've just gone and backed up and remade drives instead of paying for it, even though Partition Magic would have been faster; when I'm putzing on my home machine I really don't want to spend $60 to save a half hour of work). The $60 wouldn't be so bad if it came with free upgrades (because unlike a lot of seldom used applications, the upgrades for Partition magic are actually fairly important, I in fact do have an old version that only works if you have DOS on the machine), but since it's basically $60 each time you use it I can't justify the cost.

Re:1 Year=$180

[hedwards]

That is a good point, but pay as you go windows would be a vast improvement. Right now, there is little incentive for MS to fix windows XP, under a pay as you go model, MS would cease to receive money for copies of windows which were no longer used. Plus, with a steady stream of revenue, it would actually pay for them to fix more than just the security bugs. But, MS Office would probably blow as a sub service, unless the price was very low or an individual really used it. Personally, for small things like virus protection, I like the subscription model. My anti virus package got a free update a while ago so that I could use the current updates, the updates that I pay the sub for. They probably save quite a bit of money by just supporting the current version.

Re:1 Year=$180

[hjf]

That's like saying "people in poor countries shouldn't go to the movies, they should watch movies in TV instead". But it's not like that. You can go to the movie theater here and watch movies even before they are released in the US, or just a few days later (because in my country, movie premieres are on Thursdays. Check release dates for "Hide And Seek" on IMDB for example). But we don't pay the nearly 10 dollars it costs in the US, we pay 5 to 7 pesos, which is US$ 1,50 to US$ 2.

Software prices should be adjusted to what people can pay, but Microsoft refuses to do so. Then they lose a huge number of customers. I do not know anyone here who uses a legal copy of Windows XP (which costs over $200 for the home edition here). Not even OEM: HP sells most of their computers loaded with "FreeDOS", which is like saying "hey, at least we didn't give you a blank drive!".

I think this is a starting point for Microsoft or whatever to do the right thing: instead of suing your ass for using a pirated copy, give you a way of getting it legally without needing to starve your family to buy it.

Re:1 Year=$180

[Anonymous Coward]

For me $15/month would be way too much. I would pay 1 cent per document. That would give Microsoft about $0.25 in revenue per year,
which is fair considering how often I use office. Of course, I would expect a credit of $300 or so for my current versions of office, which as I said I hardly ever use....

Re:1 Year=$180

[Anonymous Coward]

Agreed, and it makes no sense when you consider other applications you may have to rent. $15/mo sounds reasonable to have ALL of your software needs covered, but this isn't the case with this story. Usually when someone installs Windows you need to add on quite a bit of software to make it usable. Are you really going to start paying over $100/mo if you need to rent every piece of software on your PC? It may make sense for just MS Office because it's so damned expensive in the first place if you want everything, but users may just stop at that, and even then, they might just consider OO.o, especially if their subscription runs out or they get tired of seeing that $15 on their bill every month.

Re:1 Year=$180

[jp10558]

I can't fathom why HSBC in the US would offer $500 credit card to an 18yr old student with NO income and only require $15 a month minimum payment, and not offer that to working adults in other countries.

It's unfathomable that the banks will throw credit at students with no income, sometimes up to $2,000 limits, and what seems like no credit (never had any credit cards or bank accounts before) in the US, and be so limiting in other countries.

Re:1 Year=$180

[jp10558]

Knoppix live CD an Qparted.

Re:1 Year=$180

[hjf]

I happen to have an account on the USA HSBC, too (never been in the US). Savings account costs me $2 a month, and free checking. Here in my country it costs 12 pesos, which is about 4 USD. Checking and savings accounts will cost me well over 20 pesos a month (about 7 USD).

Well, in this country, to have access to credit, you have to prove that you DON'T need credit. For example, if I wanted to have a credit card, with no income, I need to make a deposit of 100.000 pesos (over USD 33.000), and keep it in the bank, in order to get a card with 10.000 pesos limit (about USD 3.000). The same applies to credits. Of course, it's risky to do so, because 100.000 pesos is a magic number (the "rich tax" starts on 100.000 pesos), and it will set a few alarms at the government. I will need to a) pay the "rich tax". b) explain how did I get 100.000 pesos and never pay any taxes (gifts don't count).

Re:1 Year=$180

[Anonymous Coward]

(as if credit cards weren't draconian enough with interest rates)

Just a nitpick, but the word you're looking for is "usurious".

Wrong business model

[Anonymous Coward]

Part of the current service includes a ~$15 fee per month to use Office 2003.

Heck, I'd pay more than that just to not have to use Office at all!

Ok idea, wrong price

[iamacat]

A lot of decent software, such as Apple's iWork, can be bought to own for half a year of this "rental". And of course, most people can save $180 per year by going with OpenOffice or AbiWord. I can see paying $30 per month for a kind of "MSDN personal" subscription with on demand access to ALL Microsoft's up to date software, including OS.

the best part of all...

[User 956]

I saw a demo of this. It went something like: "I see you're trying to enter your credit card information so you can edit this word document. Would you like some help?"

Re:the best part of all...

[truthsearch]

It's funny but I wouldn't be surprised if Microsoft tried it. After all, what happens when the rental period expires and you just want to quickly read one of your own documents?

Re:the best part of all...

[User 956]

After all, what happens when the rental period expires and you just want to quickly read one of your own documents?

That's what I call "Rent-to-0wned".

Pay as you go versus free?

[bgfay]

There was an article earlier about Google Apps. Seems to me that eventually (and it may not take long) most users are going to be able to get by with Google's free apps. Why then pay as you go when you can have free?

One of the reasons I dropped WordPerfect and steered clear of Office was that it WAS pay as you go. Each time there was an upgrade I was a sucker and kept buying the new version. I switched to OpenOffice so that upgrades didn't cost money and now use Google Docs. I can't imagine needing to go back to proprietary software for my needs and it seems like the free services are becoming more powerful and covering a wider range of needs. So I doubt that I would ever pay as I go for software simply because I don't need to go farther than free.

I know.

[Anonymous Coward]

Let's have a meeting to decide if this will work or not.

Re:I know.

[bgfay]

You can bet there were many meetings scheduled and sat through before this idea was finalized. Yeesh.

MS New Business Logan Leaked

[Slugster]

"It's Our Computer, You're Only Using It">
~

Re:MS New Business Logan Leaked

[coren2000]

That is the revised version. The original was "All your base are belong to us!"

Great idea

[DogDude]

We're probably going to be moving to Microsoft Dynamics (mid size business financial software) partially because it IS pay as you go. The alternative is buying expensive new versions every year from the competition. Very often, bug fixes are simply not released for "old" versions, and the answer to fix something is to "buy the new version". MS's pricing on at least their "Dynamics" products is cheaper than the competition, which essentially forces you to re-purchase all of your software on an annual basis. Also, with pay-as-you-go, support is usually included.

Re:Great idea

[Anonymous Coward]

MS's pricing on at least their "Dynamics" products is cheaper than the competition

How do they swing that when so much of the competition is free? Are they going to pay you to use their stuff?

Re:Great idea

[DogDude]

There's no free stuff that's even remotely useful for businesses of my size. I've looked extensively. I'm happy to pay a few grand a year, considering the alternatives.

Re:Great idea

[KingMotley]

It may be free, but it doesn't compete.

Re:Great idea

[vux984]

With accounting software for businesses (that are bigger than Simply Accounting and Quickbooks) it has ALWAYS been a pay-as-you-go service, it just wasn't marketed as such. If you ever tried to stop paying, you'd hit a bug, or data corruption, or need updated features to handle new tax rules, and be forced into shelling out for the next version....

I'm also extremely annoyed Microsoft is buying so many of the medium business accounting packages. (Dynamics, Navision)

Its an application space that REALLY needs to be addressed by open source. We need a decent OSS alternative, and open Standards for accounting data exchange are DESPERATELY required. Too bad there's nothing less sexy to OSS hackers than working on an accounting project. :(

Re:Great idea

[DogDude]

Well, if MS hadn't bought these guys, I would never have heard of them. MS also bundles on a very nice support package onto it. I really don't mind... it's nice to know that if my cash registers decide to go haywire, I can get somebody on the phone 24/7.

But yeah, the OSS alternatives in this area are just... well... really kinda' sad. I've been looking for a new system for about a year now, and I'm 99.9% positive that there's no OSS solution for what I need (mid range accounting and point-of-sale).

Re:Great idea

[vux984]

I wouldn't be so sure, both Dynamics ("Great Plain's Dynamics" from North Dakota), and Navision (out of europe) had good market presence before being swallowed by MS. If MS hadn't started buying up accounting packages, I strongly suspect you'd have found them.

Oh, and an interesting tidbit - Dynamics used to run on Macs, not just Windows.

Re:Great idea

[rbarreira]

"Dynamics" is not the name of a product. It is the name under which all of MS's business applications are known. For example Dynamics NAV is former Navision, Dynamics AX is former Axapta (both of those were Danish companies bought by Microsoft, and they're still developed in Denmark). Dynamics GP is former great plains (which you have mentioned), and there are some other products, you can read about it in wikipedia!

Re:Great idea

[vux984]

"Dynamics" *was* the name of the product when it was still owned by Great Plains.

Pay and Go

[dalek_killer]

So if I don't pay will it go away?

Re:Pay and Go

[Anonymous Coward]

Nice try. You pay as YOU GO.

Re:Pay and Go

[apathy maybe]

In this case, unless you pay it will hang around like a bad smell.

Not exactly a surprise

[Dr. Manhattan]

"I remember saying [...] that people would spend more money on software than on hardware. We certainly haven't passed that milestone by quite a margin. But particularly as software as a service becomes a reality [that might change]." - Bill Gates, Newsweek, September 18th 2000

Re:Not exactly a surprise

[drsmithy]

I remember saying [...] that people would spend more money on software than on hardware. We certainly haven't passed that milestone by quite a margin.

We passed it long ago - especially once you move outside the realm of commodity consumer software. We have a whole office here full of AU$2000 PCs running software that has an AU$10,000 per-seat licensing cost.

Heck, even our RHAS licenses cost us more over the lifetime of the machine than the hardware itself, for most machines.

What consumers want and get are different..

[Anonymous Coward]

.. We all know that. MS are desperate to move to a subscription system. Why? Simple - there is only some many times they can "release" the same office/os software with a new coat of paint before consumers start to just say "I ain't buying it". MS needs a subscription model - that way consumers can't say "I ain't paying $15 per month" because if they did they would loose all their software (and for many consumers there is nothing known in the office suite world outwith MS Office).

The computer/software industry is changing - MS Office 200 onwards is virtually the same product with new coats of paint each time - they are running out of gas - at the moment it is being "trialled", it won't be long before it is mandatory if MS had their way. I am never really a fan of Google's online apps developments - but I will say one thing, thank goodness they are there forcing MS to make some hard choices - otherwise MS would have as all on subscription contracts asap.

Why Google or Microsoft?

[popo]

As long as we're talking about an open standard there's no reason that
other (free) players like Ajax9 won't become the ultimate winners.

And neither Microsoft or Google has a webtop that's half as slick as
DesktopTwo (which uses a very slick browser-based Java version
of OpenOffice).

The pressure is now on MSFT to be compatible with other players. The
game is certainly on, but its not just between Google and MSFT.

Re:Why Google or Microsoft?

[popo]

(I meant Ajax13, not Ajax9) - woop

Re:Why Google or Microsoft?

[guruevi]

Microsoft has never and will never play nice with other players. Unless they use the OpenOffice document format or any other OPEN format (not open with a backdoor as is ooxml) which they won't do because they just paid to upgrade their Word 97 format to Word-95-embedded-in-XML and standardized on that.

I agree however that an online office application that is also lightweight on the client side would be very well accepted. A lot of people are moving or have moved on to handheld and other low-power, low-performance (relatively speaking) devices like blackberry's, oversized cell phones and other 'book-like' devices. They already have their workgroup solution (calendars, e-mail) on the go, so if they can get their office client on the go too, without being limited to 2-4 hours of battery life, that would be a 'helpful' addition.

Leveraging The Goog's 2/22 press release

[heroine]

So now that Goog got the rental web application seed in your head, it's time for MS to hit you with another rental PC application press release. MS's model is to locate the data on your computer. Goog's model is to locate the data on their server. As much as everyone loves the Goog, let's do a test:

Enter "I'm a terrorist" in Google Apps 5000 times.
Enter "I'm a terrorist" in MS Office 5000 times.
See what happens.

Re:Leveraging The Goog's 2/22 press release

[644bd346996]

Enter "I'm a terrorist" in Google Apps 5000 times:
Advertisments for cheap explosives show up in the margin the next time you open the document. If you click on one of the links, Google gets paid a few cents.

Enter "I'm a terrorist" in MS Office 5000 times:
Clippy offers to show you how to look up synonyms for "terrorist". He then proceeds to reformat your list as he pleases.

So?

Re:Leveraging The Goog's 2/22 press release

[Belgarath52]

Thanks a lot. Now adwords offers me nothing but "Find Terrorist Bombs on eBay."

Or were you expecting something more serious to happen?

Re:Leveraging The Goog's 2/22 press release

[megaditto]

Well, from: http://en.wikipedia.org/wiki/Microsoft_Office

Office programs have contained sometimes substantial easter eggs. For example, Excel 97 [pre-9/11!] contained a reasonably functional flight-simulator. [9]

Against the trend

[Dirk Becher]

Renting is only feasible in cases where the end of usage can effectively be determined. However, since companies and home userstend to extend the usage terms as long as possible for compatibility with present systems and the user base as well for realiability issues not many customers might accept this.

It might only work in areas where the software needs to permanently be updated like virus removal tools etc. but that would rather be a content renting modal than software.

Cost:

[mr-mafoo]

A quick breakdown of the cost:

M$ Office 2003 US Retail price: $180-$250

$15 x 12 months = $180

Stall in local Street Market: less than $1 (less than authentic version)

likelyhood of this working:

It might also be work looking into how M$ would plan on manageing the activation of the software - the bulk of internet connected PCs in the developing world tend to be in internet cafés. And their rental package costs the same per year as an off the shelf boxed copy - except after 12 months it doesn't work. I dont think anyone is going to be fooled.

I. HATE. MONTHLY. FEES.

[Paulrothrock]

I avoid them whenever possible. I hear people talking up TiVo or NetFlix, but you've got to pay a stinking monthly fee. You can't pay as you go or pay for use. That's why I use the iTunes store as my TiVo. If I miss a show, I'll buy THAT EPISODE from iTunes. That way, if I don't use it for a month, it doesn't cost me the same as if I use it all the time.

If there is a service I'd like to use that forces me to pay a monthly fee, I'll spend a few hours trying to get the same functionality without the fee.

If you want this geek's business, either support it with advertising or let me pay based on my usage.

Google's business model on apps.

[Junta]

Google makes a *lot* more sense for pay-as-you go with respect to productivity apps than MS' approach.

MS just wants a continual revenue stream for no additional effort. The problems they face as business is that their product very much fits with a purchase-once and use model. Once you have the software, i.e. when microsoft's development and delivery have succeded, MS is doing nothing by default. Sure, you get better support, but honestly how many times does the average person who *is* entitled ever bother to call for help? MS wants to have customers pay even if the customer is causing no work on MS's part, even if the upgrades they would provide mean nothing.

Google is very different. The most blatant thing is client independence, no need to maintain local software. But what really is interesting in terms of cost is you offload a lot of your data reliablity costs (backup) to the third party. By providing every remotely interesting thing from top to bottom, it's easy and an average person would never realize the implications of their data being backed up, how many disks a week are dying, etc etc. It's a logical extension of the server hosting model, and very much lends itself to a subscription model that all companies would like to follow in selling product.

Re:Google's business model on apps.

[CasperIV]

Don't forget, the Google system is also removing your need for email servers, spam filters, sharing plat forms, software updates, and 10GB of storage per user for $8 a month... when did MS offer storage, and I think I trust google with my files more then MS.

Re:Google's business model on apps.

[b0s0z0ku]

But what really is interesting in terms of cost is you offload a lot of your data reliablity costs (backup) to the third party.

This was awesome until Gmail lost some of my (business related) email. Google may take a responsibility for backup, but in a large organization, stuff may get lost due to buggy software or whatever, and they might not know that it ever existed. And who are you going to hold legally accountable for data losses?

Now I have my BSD machine slurping POP3 mail from my Gmail accounts every 5 minutes to maintain a backup. Also, I don't have Internet access on my laptop 24/7. I *want* the ability to store documents and run the editing applications locally. Anything else is annoying since it depends on 99% reliable 'net access.

There's a reason why people moved away from the software model which had apps running with mainframes accessed through dumb terminals. With personal computers being exponentially more powerful today, it makes almost zero sense to go back to that model.

-b.

Obsession.

[Nick Driver]

What's their obsession with this?

Their fundamental obsession is with establishing continuous revenue streams.

Re:Obsession.

[dgatwood]

The problem is that consumers are smarter than this. If they want to get a continuous revenue stream, they would have to abolish the for-sale versions. Office 2003 for $15/month? That's a four-year-old version of Office, and renting it for 10 months would cost as much as it costs to buy that ancient version. Heck, even if they were renting the 2007 version, it's would still take under two years, so unless they come out with a new one at least every two years, it costs more to rent than to buy.

Who in their right minds would do that? Students? I don't think so. A school year lasts about 9 months. In one school year, a $15 rental fee would come out to as much as buying the full 2007 student version outright. You'd have to be a complete idiot to go for that. And businesses? Do you really think they'd be stupid enough to pay an ongoing subscription fee when they can just pay it up front and amortize it over the same time period? Uh... no.

There are two ways to maintain a revenue stream: 1. Expand your product into new market sectors. How? One possibility would be to upport Linux and sell your software at a much lower price so that you can penetrate markets that can't afford your product now. Another way is to simply lower the price so that all the people who currently pirate the software can easily afford it, then make up the difference by charging more for a commercial use license. 2. Add new features that are so compelling that people will buy it. Unfortunately, most of the Office suite is already so feature-bloated that it's a pain in the backside to use, so that's probably a bad idea unless the new feature involves adding another app to the suite.

The reality is that for low-tech software like word processors and spreadsheets, the market is saturated and has been for a while. No silly schemes like software rental are going to change that.

Re:Obsession.

[Anonymous Coward]

Right, but that's operating under the base assumption that you're the target marketplace.
You're not.

I've actually had the chance to sit down with the FlexGo team and talk to them about their mission.
Though my words here don't reflect Microsoft's position, it seemed to me like the idea was to get computers into households that wouldn't buy them otherwise.
The test run (primarily in Brazil, contrary to TFA) was massively successful, and the team is working on v2.0 now (Vista compatibility).
The goal, from what I understood, was to get computers into households with a steady, low income- The kinds of families that don't qualify for OLPC, but couldn't afford $500 at one time for a new computer.

Microsoft's a business, and clearly making a profit is a big part of their mission, but I would have thought that /. readers would appreciate their attempt to get computers into unconnected households. I'm not sure about the $15/mo for Office (this is the first I've heard of it- I would assume Office is not even required to rent the PC in the first place), but the numbers I've seen have been pretty reasonable- The consumer rents the (vista capable) computer for 2-3 years, pays their broadband fee + a small extra monthly fee, and after the end of the period, they OWN the MACHINE. The FUD and blatant lies we see here are abhorrent. I'm running linux on half my machines, and switching to google apps shortly, and even I can appreciate this.

Re:Obsession.

[T-Ranger]

And businesses? Do you really think they'd be stupid enough to pay an ongoing subscription fee when they can just pay it up front and amortize it over the same time period? Uh... no.

Well, perhaps not at $15/month/seat, but at some reasonable number, possibly. And if MS would guaranty/lock-in that price for, say 4+ years, then absolutely. For one, you move a capitol expenditure to a recurring cost. This can be a good idea. Perhaps most importantly, however, is that you get predictability - stability. Cost stability may be worth, I dunno, 30% over an even low risk gamble. ("For the next 5 years, office software costs $10/desktop. We thus only have to think about it again in 4.5 years").

One significant problem MSFT has today is that they have toped out. Their business model has been based around recurring sales every 3-5 years for their various products. Sell, write upgrade with useful/marketable features, sell again, repeat. Most people have no compelling reason to upgrade to Vista (Even if it didn't suck), or to Office $NOW. (admitidly, Im not a heavy office-type user, but what is new/better with Word and Excel since 1998? Seriously.) People slow down from upgrading blindly to every 2nd or 3rd version. Or switching to something that is cheaper, and "good enough" (oo.o coming quickly to mind). MSFT is not stupid and they see the built in problem with this underlying theory of operation. The number of remaining useful/marketable features of an office suite is drying up. Turn your focus from product features, to stability, and technical support. Im not saying that MSFT will opensource their products. But they are looking to take the opensource business model of selling support for their software.

Re:Obsession.

[Lars512]

There are two ways to maintain a revenue stream: 1. Expand your product into new market sectors. How? One possibility would be to upport Linux and sell your software at a much lower price so that you can penetrate markets that can't afford your product now. Another way is to simply lower the price so that all the people who currently pirate the software can easily afford it, then make up the difference by charging more for a commercial use license.

Sometimes economists can pull the latter off. They can lower taxes AND take in more money, since less people avoid the lower tax. Maybe if MS chose a lower price point, they could get much more sales in countries where piracy is rampant. This is even without considering a separate commercial version, as you suggested. Then again, they'd probably have done this already if they could.

2. Add new features that are so compelling that people will buy it. Unfortunately, most of the Office suite is already so feature-bloated that it's a pain in the backside to use, so that's probably a bad idea unless the new feature involves adding another app to the suite.

I'm actually perfectly in favor of a subscription model, but only one where I keep paying and you keep improving, say on a 6-monthly or yearly basis. I don't want to keep paying for software which is stagnant though. In this respect you're certainly right, people wouldn't pay more for that. A good subscription wouldn't be so different from being up to date with good software which is regularly released on such a cycle. I think they can still do things with MS office, so I'm not opposed to them charging for improvements.

Re:Obsession.

[AlHunt]

"pay as you go" is nothing new. I saw it back in the early 90's when evaluating vertical applications for a trucking company. One package even had a dongle gizmo you had to plug into a serial port in order to use the software - maybe a few in different implementations. In the end I settled on one they could just buy and use.

Re:Obsession.

[gatesvp]

And businesses? Do you really think they'd be stupid enough to pay an ongoing subscription fee when they can just pay it up front and amortize it over the same time period? Uh... no.

Ummm... that's exactly what they do. Many businesses (big and small) lease their computer hardware. It's easy on the accounting side and it helps with cash flow. Many businesses also lease their computer software in one way or another. They buy site licenses (or somesuch) for Office and Windows and Crystal Enterprise and Oracle, etc.

In fact, when an enterprise-class client of mine was looking into the price of moving from Crystal Enterprise 10 to XI, the price was quoted as zero. They were paying an annual support fee for the product over a certain number of procs. If the client wanted to move to XI, Crystal was just going to send them the disks, b/c they want the rolling support fees.

Now in this case, $15/month is simply too much (especially in Brazil), however, the concept of pay-as-you-go software is both sound and useful. Clients receive ever-improving software and software companies receive consistent revenue streams on the basis that they continue to improve the software. And really, it's a self-correcting system. If I don't like the product, I'll look for a competing product with a better price.

Sure there are monopoly problems, but competitors worried about drawing in new customers will be building data converters to help keep on top. In fact, that's what's happening right now, all of the new free online utilities have converters for Office docs. People are sick of the Office upgrade cycle and Google wants to capitalize (ironically, Office finally has a version worthy of calling an upgrade).

The reality is that for low-tech software like word processors and spreadsheets, the market is saturated and has been for a while. No silly schemes like software rental are going to change that.

I'll agree with your first statement, but not your conclusions. I believe that the rental model will in fact revolutionize the way software sales are done, especially in the low-tech markets. I mean, imagine that someone shows me a new spreadsheet app that I really like, but I can't afford it and I'm already paying the MS tax for Excel. Well under the rental model, this is no longer the case. I can rent the new software for a few months and try it out (most likely on a trial). If that software is more suited to me (cheaper, more functional, etc.), then I cancel one subscription, export my data and pick up the other subscription. Now I'm not out anything but a little time. I haven't killed my cash flow, I just get my new product.

Re:Obsession.

[dgatwood]

Businesses lease the hardware for a different reason, though. In most of the lease deals I've seen, if the hardware dies, they send you a new box and you send them the dead one. Your hardware support costs go to zero. You're basically paying more to lease in exchange for having to hire a lot less support staff.

Also, most of the leases I've seen are on a two year lease and total less than the cost to purchase equivalent hardware from a name-brand company. If you're just going to replace it in two years anyway, you'd be silly not to do that. The extra money you'd save by buying it and then selling it on eBay yourself is negligible compared to the added overhead of going that route. Better to leave that to a company that has such processes streamlined.

Finally. with hardware, unless you sell the old hardware on eBay, you don't get a discount for buying an upgrade. You pay the full price. With software, you get a discount when you upgrade. That's where the fundamental difference lies between hardware leasing and software rental....

Monthly payments are a means for the wealthy to keep the poor poor. The wise do not live beyond their means. The wise find ways to live just a bit beneath their means and save the difference so that one day, their means can be greater.

Re:Obsession.

[gatesvp]

Monthly payments are a means for the wealthy to keep the poor poor.

OK, I'll bite, are you for or against the rental of software? You've just given a bunch of good reasons for renting hardware and then you quote this stuff about "monthly payments" followed by another contradictory sentence: "The wise do not live beyond their means.".

The problem with both of these statements lie in a definition of terms. The "wisdom" of your first sentence would imply that people receiving regular (say monthly) paycheques are inherently "not wealthy". I mean, I'm sure that Ted Turner receives monthly cheques from his clients but I don't see how that makes him or clients "not wealthy".

You second statement seems to evidence the problem in the first. If the wise live beneath their means, then shouldn't the wise be renting quite regularly? If I need a car and can't afford to spend $600/month to buy one, should I lease one for $400 instead? I mean, I've just shaved $200/month off of my expenses, so I've found a way to live beneath my means via rental. Or are you implying that I simply shouldn't own the car until I can pay for it outright in cash? (i.e.: all software should be purchased in full?) Does the same concept apply for a house, a PS3 and an education? Would "the wise" ever take out student loans b/c they couldn't afford tuition?

Are you saying that leasing hardware is OK, but that renting software is bad? B/c it seems to me that unsupported software is less useful than unsupported hardware, but your whole last paragraph is just a jumble.

Re:Obsession.

[dgatwood]

You second statement seems to evidence the problem in the first. If the wise live beneath their means, then shouldn't the wise be renting quite regularly? If I need a car and can't afford to spend $600/month to buy one, should I lease one for $400 instead? I mean, I've just shaved $200/month off of my expenses, so I've found a way to live beneath my means via rental. Or are you implying that I simply shouldn't own the car until I can pay for it outright in cash? (i.e.: all software should be purchased in full?) Does the same concept apply for a house, a PS3 and an education? Would "the wise" ever take out student loans b/c they couldn't afford tuition?

The point I was trying to make is that making monthly payments and at the end having nothing to show for it is foolish if for a modest difference in price, you can end up with actual equity. However, since you asked....

A PS3? You betcha. If you can't afford to pay for a PS3, you should wait until you have the cash to afford it. With a car, that's a bit different because the cars that most people could pay cash for are in such bad shape that they are a poor investment. Ditto for a house. That said, if you can't pay a fairly good percentage up front, it's still a bad idea. You should minimize monthly payments as much as possible. Contrary to popular belief, it is perfectly acceptable to live with your parents for a couple of years while you save money towards buying a place to live.

College tuition? Debatable. Will the extra money you make from going to a more expensive school exceed the extra money you spent within a reasonable time? If the answer is "no" and you don't have a really good scholarship, your answer should also be "no". In general, unless you're talking about a med school or a law school, the answer is probably "no". In general, you get out of college roughly what you put into it (intellectually speaking, not financially), and you can get a good college education without breaking the bank. You really can.

As for a house, that's something that few can afford to buy outright, and therefore, you really have to make an exception to the "no monthly payments" rule for that. However, again, if you aren't building equity, you're throwing money away. If you're renting, you're throwing money away, both in terms of not gaining equity and in terms of losing the tax benefits of a mortgage. There are rare exceptions where the opposite is true (e.g. the SF Bay Area), where you actually come out ahead by renting. As a result, you can't always say that renting a house is a bad idea. That said, usually, it is not in your financial best interest to do so.

The problem with both of these statements lie in a definition of terms. The "wisdom" of your first sentence would imply that people receiving regular (say monthly) paycheques are inherently "not wealthy". I mean, I'm sure that Ted Turner receives monthly cheques from his clients but I don't see how that makes him or clients "not wealthy".

Monthly payment for services is completely different than monthly payments for a tangible item. You don't have any expectation of equity in a service. However, the service provides something beneficial. The alternative, slavery, is unethical, so you don't really have a choice but to pay your employees monthly unless you can do without their services.

Are you saying that leasing hardware is OK, but that renting software is bad? B/c it seems to me that unsupported software is less useful than unsupported hardware, but your whole last paragraph is just a jumble.

Leasing computer hardware is bad. It's just not as bad. It's bad because it wastes money, but it's not as bad because you're getting significantly improved support for that extra money. Software rarely needs the same level of support as hardware. Usually, if software is confusing, you can shout down th

Re:Obsession.

[gatesvp]

HUH? OK, you provided tons of opinions (with some poor math) and then did nothing to defend your original comments. You just railed off a bunch of opinions that completely contradict your original comment that

Monthly payments are a means for the wealthy to keep the poor poor

.

Now, to top this all off, you went tangential to my questions. I didn't ask if it was worth "paying extra money for a better school", I asked if was worth taking out a loan (i.e.: monthly payment) to fund an education. And mortgages don't carry tax benefits here in Canada how much does that change things?

What you're fundamentally missing here is the nature of each of the items I listed.

• An education is an investment (in yourself).
• A car is an expense (not an investment) that helps provide a transportation service.
• A house is an investment with a varying return (but they're not necessarily great) that also provides the service of housing.
• A PS3 is just an expense, it provides an entertainment service, but it's really nowhere near as important as transport and housing.

So if I rent a car, I still get the transportation service, but I'm not throwing extra money to try and own the car. If I rent an apartment I get the housing service without the overhead of maintaining a house. If I take out a loan and purchase a car, I'm slowly accumulating some equity in the car, but I'm also paying for the car as a service and I'm lining the banks pockets to pay for the car that I couldn't afford in cash.

Now to the issue at hand: Hardware/Software.

Hardware, right now, is self-obsoleting. It's just the way it is. If I spend $1,000 on computer hardware, that computer will be worth $100 dollars in about 3 years. Now if I'm running a company and I could buy the hardware for $50/month or lease it for $33/month, which should I be doing? Well, if my workers continue to need up-to-date hardware (graphic designers, engineers, developers, etc.) Then I should really be leasing. Given that the hardware is depreciating by 30%/year, it doesn't really seem like a good idea to "invest in it". Computer hardware isn't like a good shovel, it doesn't work until it breaks, it becomes irrelevant long before it breaks.

Now software is the exact same thing. You say:

Monthly payment for services is completely different than monthly payments for a tangible item. You don't have any expectation of equity in a service.

Well software is not a tangible item, software is a service. Software continues to work only so long as its developer decides to keep it working. Software is self-obsoleting.

Look at a program like QuickTax for an easy example. It comes in a box, you pay money for it, it has an install CD and a manual and all these cool tangible things, but it's just a service. It's like a tax-guy in a box. If you kept the thing on your shelf for 12 months, it wouldn't be worth anything. Well, Quicken is the same way, I've been running Quicken since '98, but I have XG 2003 installed. I just received an e-mail that support for XG 2003 is up. There will be no more updates, no more fixes, no more support, the app is dead it's time to upgrade. The service is basically dead.

So I paid $100 for it, and I'll have to drop another $100 (so it's dropped in price), but wouldn't it just have been easier to pay $25/year for it? I mean, I pay the same amount, Intuit gets a regular cash influx (rather than yelling at me every four years), and Intuit can use that regular income to fund continuing improvement.

As to this comment:

By far the worst idea, though, is leasing a car.

Your whole argument rests on the concept that leasing a car is "slightly" cheaper than purchasing a car outright, but it's not. You're also assuming that the extra money you spend on owning the car will actually show up in equity at some point. Four years ago interes

Oh No Clippy!

[aquatone282]

You WHORE!

<sob!>

look for this only where OpenOffice is gaining

[Locutus]

Just a reaction to pressures OSS is putting on them and won't happen where MS Office is still a huge money maker and PHB's are suckered into upgrade after upgrade. You know, kinda like how MS Windows Express-edition showed up in Taiwan after HP and Dell couldn't keep up with demand for the cheap laptops running GNU/Linux.

It's only going to put a small ding into Microsofts profits and it'll help slow down the cascade to OSS.

Remember, 30% of Microsofts profits come from MS Office so they can not afford to cut pricing across the board on this productline. IMO.

LoB

I'm so proud of Microsoft!

[pizzach]

I can't believe they finally did it! I'm so happy for Microsoft. This has been the long time dream of little Billy and now it's finally happening...

Okay, Microsoft, can stop now. It was cute for a bit, but cut it out. Really. It's getting annoying.

Might be good for some people.

[alan_dershowitz]

I can see advantages to this system: if you spread out the cost of software like Microsoft Office over it's lifetime, it may be better for a business or consumer to pay as they go and always get the latest version, when it's important to them. Software like antivirus which has a subscription service anyway could be enhanced by this. Maybe you only need a particular software for a month to accommodate a client's needs. Lots of good reasons.

I think the people with the biggest problem with this will be people that pirate stuff like Office, but they will not be the loudest voices for obvious reasons. The loudest voices will probably be people who want to own their software, not rent it, which is a perfectly valid position. Besides open source products that can never be taken away, I am certain that there will be a few proprietary pay-once products that will rise to prominence in response to service-software.

Citizenship involves Fairness and Kindness

[jkloosterman]

Why must we force people of lower income to either pay what is beyond their reach for our tools or by forced to use inferior versions? In the financial situation of most of us, if we choose to pay Microsoft $400 for the usage of their software, we may complain, but it is really not that much relative to our other costs. For those that have lower income, because this is so much beyond what they could ever afford, M$ is rolling out programs like this. But is it being a "responsible global citizen"? http://www.microsoft.com/about/corporatecitizenshi p/citizenship/default.mspx

Why not adjust the prices according to the relative financial burden on the average person in an area? With Microsoft's activation system, they could prevent having their products imported to other countries.

It is unfair and unkind to either force the less blessed on the earth to use stripped-down versions of software, such as Windows XP Starter Edition, or to gouge out their money through plans like this.

(I'm not trying to be a Microsoft-bashing troll.)

Re:Citizenship involves Fairness and Kindness

[Maximum Prophet]

There's sound economic theory to this. The airlines do it. Two people can be sitting right next to each other, one might have paid over $600, the other less than $200. The difference is that the $600 person had a refundable ticket, while the other person was flying on standby. The $400 difference is the cost of convenience.

Non-airlines have had a devil of a time tranlating this to thier businesses. The airlines have absolutely no danger that the $200 person will try to sell his seat to someone else once the airplane is in the air, but companies that sell more permanent things like software do have to worry that the educational versions will wind up on the grey market competing with the full priced versions. Some try to differentiate with branding, where a high end Toyota might be the same car as a low end Lexus, but cost less.

In an ideal world, you'd sell a business service for a percentage of someone's income. A millionaire would pay you $100,000, a regular person would pay like $4,000 and a poor person would pay you $400. (That assumes that your costs to provide the service were negigible.) Jesus thought this was fair, and it's the way Government charges income taxes. Unless you can threaten people with enternal damnation or send in the goon squad it's really hard to implement a system like this, unless like the airlines, your product vanishes as the person uses it.

Re:Citizenship involves Fairness and Kindness

[jbrandv]

"With Microsoft's activation system, they could prevent having their products imported to other countries." Ha Ha Ha
They can't prevent anything with that turd!

Re:Citizenship involves Fairness and Kindness

[zxnos]

in an ideal world, you'd sell a business service for a percentage of someone's income.

eh? so if i earn nothing, or 1$, i can get free or essentially free services? this makes no sense at all. why should someone who earns more money have to pay more for the same service? i dont get it. it just adds another step to selling something. now i have to verify a buyer's income? i also dont think it is right that the u.s. of a has a graduated income tax system. if we have to have an income tax, everyone should pay the same percentage. if you want to pay more, there can be a line for that. that is fair.

if i were a millionaire, i would get my trophy wife to contract for the service.

Offtopic? WTF is wrong with moderators?

[Anonymous Coward]

This is clearly a pertinent comparison, given that both are current and obviously interrelated issues.

Office 2003 student edition

[gelfling]

Was $99 for installation on 3 machines. In the 4 years I've had it I've seen no need to replace it or upgrade it. So that's $33 per machine /48 months = 69 cents/month. If MS thinks I'm going to pay a 2180% premium they have been smoking too much crack. Well to me it's just another nudge off any and all Microsoft code forever.

Sayonara Redmond Dudes.

Re:Thank you M$

[djchristensen]

I was going to say the same thing. I suspect that once people have
to pay on a monthly basis, they'll take a harder look at what they
are paying for.

It's like paying for a gym membership. If you go once a month, you're
paying like $25 a visit, whereas if you go three times a week, you're
paying you're paying closer to $2 a visit. So if you write one word
doc a month, it would cost you $15. Is it really worth $15, or might
OpenOffice for $0 suffice?

The best thing MS could do for OpenOffice and other OSS apps is to
eliminate the free version of Word from new computers and replace it
with a subscription service. Make people think about where their
money is going and whether it's really worth it.

out of most people's reach

[joetheguy]

Consumers still like the option of buying complete software packages. However, for places where the price of software keeps obtaining legitimate versions out of most people's reach, a rental program may be a useful alternative.'

Wouldn't the obvious solution be to lower prices? Its like MS is trying to work around a problem that is of their own doing. I really think what contributes most to piracy is when people feel the price of something is more than the value they get from it. But I think MS's big problem is they don't want to figure out how to do development in a more efficient productive way that would let them charge less. They are an icon of what I call american corporate socialism, inefficiency and unreasonableness for the sake of the economey. It always catches up with you though.

Why make a business pay some $400 for each copy of office when only a fraction of the total value of that product is used on each computer? This is a case where a legitimate lite version would be great. And by legitimate I mean don't reserve some feature everyone wants for the high end version. Adobe does this with Acrobat, making you buy the full version to make forms, when most people who want to make forms have no need for anything else in the full version.

I don't think software rental makes a whole lot of sense for most businesses, but hosted apps like Google Office do make some sense. There is always a balance between control, functionality, and support. With hosted software I give up some control, but I don't have to support it either. With rental software I give up some controll, but I still have to spend all that time supporting the software.

I think the only way a rental software system might work is if really acted ln a service based way. For a small loss leader investment, you get a MS app server to sit in your office. You then rent access to apps, MS put them on the server for you, and all your desktops can run those apps off the server. You don't have to manage the server at all except for setting up accounts and being sure your computers can connect to it. After that point MS takes care of the rest for you. You've basicly outsourced a big chunk of your IT responsibilities. With a fast internet connection, a local server might not be needed. Something like this might bring the value proposition back into balance.

Same Microsoft

[mpapet]

The cost of $15/mo may not sound like much, but it's +/- 6% of the gross monthly wage of the average Romanian. http://en.wikipedia.org/wiki/Romania

Let's say my gross average monthly wage in the U.S. is $4000. (not even a decent salary in urban America) 6% is a whopping $240.

I won't ever deny Microsoft the capacity to make products/generate revenue despite my unfavorable attitude towards the company as a whole. But I don't see how they can make pay-as-you-go work at the prices they demand for their products. Much less the prices they are demanding for pay-as-you-go Office.

Maybe the summary has the pricing wrong?

Will it work?

[the_humeister]

Why not? It works for video games.

Re:Will it work?

[Ahayuta]

Why not? It works for video games.
When was the last time you thought, "YES!!, I get to type a word document!!!"

$15 a month they must be kidding

[Anonymous Coward]

The problem is not the monthly rental, but what they want for the monthly fee. A dollar or two a month is reasonable, $15 a month is not. Especially considering the latest "improvements" in most office products seem to be copyright and security protections. How much has any of it really changed in the last 10 years?!

$15 a month for access to just about every single Microsoft Product including OS and Office and throw in a few games every year, sure you might sell me there, but for just office, nope not going to happen. They obviously are buying some good drugs with those rental fees if they think it is reasonable.

The failure of this will be of epic proportions...

[Mix Master Nixon]

If I was using Microsoft products in the third world I'd have a healthy chuckle at MS's expense as I dropped chump change on a never-gonna-expire copy of the same program they're trying to rent to me temporarily at a greater expense. It's like renting a car for a week - that you could buy for far less than the cost of a week's rental, probably with options thrown in that aren't available on the rental model. This idea is so doomed to failure that most of the people it's aimed at will never even know it exists. It is as if it was concieved exclusively to be mocked relentlessly on Slashdot.

Throwing caution and karma to the wind...

[le0p]

I'm going to say that this is possibly useful to some people. Personally, I have a use for Photoshop (I know, not MS but bear with me) maybe twice a year. Does that warrant paying for it? In my mind, not even close. So what are my options? I use a lower cost and maybe lower functionality app that I'm not familiar with or I steal it. Not really great options in my opinion. I would not at all mind paying 15$ to use it for a month when I need it. It could be useful if there are few if any restrictions on starting/stopping the service. If there's a startup fee (like an MMO's original purchase price) than it's not that great but even that could be OK if it were low enough (read 30-50$). There weren't alot of details here, but I could see this having a market.

Re:Throwing caution and karma to the wind...

[Anonymous Coward]

So what are my options? I use a lower cost and maybe lower functionality app that I'm not familiar with or I steal it.

Dude, that's kay-razee. Steal it? Gees, they have cameras all over the store, you're going to get caught. Just infringe the copyright and download it!

Or do what I do and use the "lower functionality app" that I got with my video card in 1992. No way I'd buy photoshop. Hell, I wouldn't even download it off of bittorrent!

Isn't that just racketeering?

[192939495969798999]

What's the difference between "pay as you go" and "if you don't pay, something bad may happen"? It sounds a lot like a protection racket to me, with software shutoffs and license revokations instead of firebombs and baseball bats.

It's been "pay as you go" rentals for years!

[Anonymous Coward]

So, you're using Microsoft Word, and someone sends you a Word document - a Word document you can't open, because Microsoft has changed the file format yet again with this new release. You might as well be using Word Perfect or Star Office; actually, you would be better off as Star Office at least has a pretty good chance of opening that newer document.

I had to pay the rental fee in 1996 when Road Rash came out for the PC; specifically, I had to pay for Windows 95. Again, I had to pay the rental fee again a few years later when there was some other game that required win98. Then I got hit with the damned Sony rootkit, and as I'd lost my sound and video drivers and they were no longer available for win98 I had to pay the rental fee again to "upgrade" to the less functional (several pieces of software didn't work at all, and some hardware functionality was degraded, specifically my CD burner) and more annoying ("You have unused icons on your desktop" popping up at least twice per session, WTF moron put that shit in there?) XP.

I've been renting from Microsoft for years. When they stop patching the holes that their patches keep opening, you have to pay the rent again.

So, what's new about this, anyway? I've gotten pretty sick and damned tired of paying for software I should already own. I've been weaning myself away from Microsoft as much as I can; were it not for EAC and the drive that Microsoft monkeyed up so Linux couldn't read it I'd be completely Microsoft-free now.

It's news to me..

[mariushm]

I'm from Romania and this is the first time I hear about this option, to rent software.. and with modesty I'm pretty much informed about IT ...

Price is too high anyway and probably companies would rather buy licenses because bureacracy (it probably spelled wrong) and legal complications are too high.

The company that I work for is planning to organize a programming contest (the ideea is to find future programmers in highschools, recruitment and so on) and contacted the Microsoft office here in Romania and asked if they would be willing to send us some promotional content (flyers, demo cds and stuff like that) .. A week later a package comes straight from Microsoft Ireland with lots of coupons for Microsoft exams and about 5 dvds with the full, unrestricted version of Windows Vista Bussines edition and a 60 day limited version of Office 2007. Legally, our company probably can't use those because the company has no receipt for the dvds and no papers and stickers but what would stop the company give a full Windows Vista and a 60 day trial of Office to programmers as prizes?

Users aren't really excited about renting software, they'll either pirate the software or use freeware/open source products. You can actually live one week here with 15 dollars (excluding rent).

Misleading name

[HangingChad]

When it involves Microsoft it should be called "pay and pay and pay as you go."

Please make a note.

What a joke...

[Raistlin77]

From the summary...

"However, for places where the price of software keeps obtaining legitimate versions out of most people's reach, a rental program may be a useful alternative."

Oh right, because paying $150 per month for 10 programs makes them so much more obtainable...

Re:What a joke...

[rhizome]

Oh right, because paying $150 per month for 10 programs makes them so much more obtainable...

They have to react to Google's announcement yesterday with an unworkable plan. This is how they always react to the innovations of others.

They already did this

[Joe5678]

They already did this. Remember when they eliminated product upgrades (with a few exceptions for home users) and implemented Software Assurance. You pay ~50% of the purchase price and get two years of Software Assurance. A new version comes and you get it for "free". If you don't buy Software Assurance and a new version comes out, there is no upgrade to purchase, so if you want it you have to pay the full price.

Seems like "Pay-As-You-Go" to me anyway. At least that's what we're forced to do unless we want to pay out the nose every 2-3 years for Microsoft Office.

Re:They already did this

[DogDude]

They're doing this with Microsoft Dynamics (their new business software). It's not 50%... it's like 10% of the purchase price for those products. It's MUCH cheaper than the alternative, which is primarily Intuit, who push out a new version every year, and support their old versions for sometimes not much more than a year, making it so that you essentially have to buy all new software every year.

Software Assurance successful?

[Anonymous Coward]

Despite the success of programs like Software Assurance

Software Assurance was only successful in that Microsoft got money for nothing from the suckers who signed up for it when it first was unveiled and had their term expire without Vista appearing.

It's all about the upgrades

[Mr.Scamp]

It's all about the upgrades or lack thereof. We are happy on Office XP and Windows XP. We will certainly skip at least one or two version upgrades on both products. Microsoft must hate that. So the are looking for ways to make sure we pay even if we don't upgrade and/or for a way to force upgrades when they want. Subscription software works for both goals.

More Piracy

[SandwhichMaster]

I'm curious about the effect this will have on piracy. I would assume that people are MUCH more inclined to steal a permanent copy than pay a monthly fee forever. Perhaps it will also spur a growth in open source apps.

What I'm really worried about is reduced content. We're seeing things like PS3's new Gran Turismo where you're expected to pay additional fees for cars, tracks, and other content that should have been included in the first place. Verizon cripples the ass out of their phones to force you to buy things like a "Music Essentials Kit" for $29.99. Even EA's NHL07 expects money for stupid things like old Jerseys.

I miss the days when companies tried to impress you into purchasing a product, not screw you out of money.

Wait 'til the RIAA gets hold of this....

[Ollabelle]

We'll let you listen to that song once for, say, $0.25?

Re:Wait 'til the RIAA gets hold of this....

[Wesley Felter]

Several companies are already offering music rental services... powered by MS DRM.

But we got AWAY from this stuff with the PC...

[Svartalf]

That's what IBM and the Seven Dwarfs were doing back in the day- and while it worked okay then, what we've got now works better and few will honestly want to go back to that stuff.

MS needs to come up with something that actually generates value to keep making money, to be honest. That X-Box thing not making them enough? Oh well... Shouldn't have strip-mined the market the way they've been doing for the last 10 or so years or more.

O RLY?

[Fred Ferrigno]

According to your blog, you recently switched to Vonage and gave it high marks. How is their pricing model any different than NetFlix? Don't you get a monthly bill from them even if you don't make any calls? Surely you can go to your local mini mart and pick up a prepaid calling card or even a pay-as-you-go cell phone.

Re:O RLY?

[Paulrothrock]

That was a legacy switch, and was primarily made to reduce said monthly fees.

My wife requires the phone number for work, but we found out we could switch to Vonage and keep our number. If we didn't need it, I'd have dropped the phone service a long time ago.

Re:O RLY?

[Fred Ferrigno]

If I don't use my phone, my monthly phone bill is less than Vonage. Just like NetFlix, Vonage is only cost-effective if you use the service frequently. It seems the real problem you have is not the pricing model, but the price. I don't think you or anyone else is going to opt for per-use service if it ends up being more expensive than the flat-rate. If you normally rent a lot of movies, NetFlix is actually a pretty good deal.

Re:Microsoft vs. Google: Cost

[Kozar_The_Malignant]

Google: $50.00/machine/year x 28 machines = $1400.00/year
Microsoft: $180.00/machine/year x 28 machines = $5400.00/year

At that cost from Microsoft, it takes 2.78 years to amortize the cost of a full version of Office 2007 Pro. We don't upgrade anywhere near that often. However, the cost from Google is a lot more reasonable. Add in that most of our people don't use anywhere near the full range of features in Office, the Google option makes sense.

No thanks.

[kimvette]

I OWN copies of Microsoft Office 2000.

I experienced rental with Office XP (e.g, Activation), and it sucks.

My solution now? Unless I need a macro, it's OpenOffice for me, otherwise, Office 2000 running under Crossover Office.

Renting software -- are you kidding?

Mod up - funny

[gauauu]

If I had mod points, I'd give them to you...that's hilarious.

Price making it unavailable?

[misleb]

Um, I'm not sure how $15/month is going to make the software any more appealing to people who can't (or won't) pay for it all up front. I mean $15/month is still pretty steep for a lot of people. No better than the $200 or whatever the full package normally costs. In fact, pay as you go usually ends up costing the consumer more in the long run. I mean, that is why companies want to do it. Recurring revenue means more $$$ from each individual.

Rather than buying a package once for, say, $250 and using it for several years (yeah, there are a lot of people still using Office 97 and it works just fine for them), people end up paying much much more in "rental" fees over time. I'm not saying "pay as you go" rips people off. Clearly there is added value in always having access to the latest version of theh software. I'm just saying it costs more money in the long run. You have to weigh the value in always having the latest version against paying more. In the case of Office, most people do just fine running the same version for several years and only doing periodic upgrades.

-matthew

Leveraging your user base...

[Overzeetop]

...is what this is called. You see, everyone (and I use that in the generic, rather than literal sense) uses MS Office is their standard. Is it worth an hour of time per month per admin employee - 15 minutes or less for professionals - to have a seamless transition and not have to make any legacy document changes?

From a personal standpoint, it doesn't make sense. Who cares if you have to spend a couple extra hours a month to save a couple of bucks? From business standpoint, it's all about the bottom line. If I can sell you a product that will mean your widget costs $500 to produce instead of $550 to produce, that makes good business sense. If I happen to be making $100 on each widget you sell with my technology, does it really matter, as long as the savings are transparent? The individual cries foul, but the businessman counts his stock option bonuses and orders another beer.

Welcome Back to the 'Future'

[Anonymous Coward]

Welcome 'back' to the Future people. It's the mainframe era, all over again.

Step 1. Rent software to people, making your company a guarenteed income, while preventing piracy.

Step 2. Go further, and rent storage, to people, effectivly controlling their data

Step 2.1 Go even further, and rent processing/processor time to people, no need for the sheep to actually 'own' their PC, or their data.

Step 3. Profit, having fleeced the populace.

Now, before anyone disagrees that this could never work, it's ALREADY working. People don't OWN their cellphones, they rent them. People don't 'OWN' that ringtone, you have a license to use it, on a particular phone.

20.00 / month contracts for the most basic of cellphone services. We endure dropped calls, overbilling, contracts with tiny print, and feel priveleged to own one of these devices.

Prepare to get fleeced people, Microsoft and google will own you yet.

Cheap for the first few months...

[barkingcorndog]

...but outrageously expensive in the long run. I've had Office 2000 for about 6 years now. With this pricing scheme, it would have cost me $1080. Of course, that's assuming that the price stays the same over the course of 6 years.

I'd do it...

[encoderer]

I'd do it. I'd sign up in a second if they offered it to the US. Renting often costs more than buying--for basically EVERYTHING. Your argument could also be "Why would people RENT a house when they could just BUY ONE for SO MUCH CHEAPER?" "Why would a person ever RENT A CAR? It costs $45 a day to rent a car that would only cost you $500 a month if you bought it"

Convenience. Just that simple. Convenience.

Re:I'd do it...

[dgatwood]

If you could buy a house for ten months' rental---say you'd spend $300 a month to rent or $3,000 one time to buy---you wouldn't rent. If we were talking about renting a $3000 tool for $15/month, it would make sense. For a $150 program (that's what Office 2003 costs to buy), a $15/month rental is beyond absurd.

Renting a car isn't the same thing. You rent a car at $45 per day because you need something special (either in terms of features or physical location) for a very short time. With an office suite, you generally either need it permanently or you don't. And nobody in their right minds would rent a car for $45 per day in their home town on a long-term ongoing basis because you only got paid on a weekly basis and can't afford to pay $500 at once for the first month's payment. Instead, you'd be paying $315 for the first week. Anybody with an ounce of brains would find somebody to drive them around for a week, and then they'd have the $500, plus an extra $130 of spending money that they would otherwise have spent renting, plus an extra $750 per month from then on.

Now if you mean renting a car at $45 per day versus buying a car that costs only $500... well, there are plenty of reasons not to buy a car that costs $500. The first year's maintenance is liable to cost you twice what you paid for the car. :-)

Renting a house isn't remotely the same thing, either. When you consider that you can invest the remaining money in a high-interest certificate instead, you don't normally come out very far ahead by buying. In much of northern California, in the long run, it actually comes out cheaper to rent a house than to buy, which is why a lot of housing analysts are expecting a big housing crash in the Bay Area. The one thing that buying gets you is stability. Beyond that, it's a net loss even after you factor in appreciation in value. Plus, if you're renting, you can make the landlord fix things that go wrong. That can add up, too.

Renting makes sense when your needs are temporary or when it is cheaper than buying. Renting of software only makes sense if you can reasonably expect to get more out of it (e.g. free upgrades) than by buying at the same price. Now if you bring the price down to where someone with really low income can truly afford it, then yes, it makes sense. At $15/month, you're not in the ballpark. If I were in that situation, I'd either use it at a friend's house or pirate it for a while, put that same $15 each month under my mattress, then buy a legitimate copy after less than a year. You would truly have to be either a complete idiot or the world's worst accountant to think that renting Office at $15/month makes the slightest bit of sense.

Re:I'd do it...

[innocent_white_lamb]

If you could buy a house for ten months' rental---say you'd spend $300 a month to rent or $3,000 one time to buy---you wouldn't rent.
 
You might be surprised.
 
A friend of mine had a house rental business a couple of years ago, until he sold it. He was, basically, a slum landlord. He purchased all kinds of run-down houses for $3000 to $5000 and rented them out for $300 to $500 per month.
 
His tenants weren't exactly the sort of folks that I would want to associate with, but he collected a substantial rent each month off of those shacks during the time that he had them.
 
People will rent anything.

Re:I'd do it...

[ffrinch]

According to Amazon, Office 2003 Standard is $400 retail; Professional is $500. It's only the Student edition that's $150. Assuming 2-4 years between versions, $15 a month isn't actually a bad price.

Your house analogy ignores the fact that a) some people don't have $3000 and can't get it, but *can* find $300/m; and b) there might be a good reason not to buy. If you were leaving the country in a month, for example, or if having that kind of asset would have implications for your tax or social security situation.

Or the capital might be better-used elsewhere. If you were starting a new business, it'd make a lot more sense to pay by the month for an Office subscription than it would to buy copies -- you need every cent you can spare, and there's a pretty good chance the business will have folded long before the rent reached the amount it would have cost to buy.

Re:I'd do it...

[dgatwood]

Except that Office Standard 2007 retails for $399. Why would anybody spend $399 (retail) for Office Standard 2003? Because it is an old edition, companies with leftover stock have to dump it for substantially less than retail. That's a really good way to buy software cheap, BTW---particularly if the manufacturer has a "free upgrade if you bought it after a certain date" policy. I doubt Microsoft does, but I've gotten some expensive software for as much as half off the typical going price (which was, in turn, about 20% off retail) by doing that.

I had no trouble finding a half dozen merchants selling the non-educational Office Standard 2003 in the $130-150 range with a quick Google search. Smart buyers don't pay retail. If you pay retail, you're getting screwed. If you can't knock at least 25% off retail, you're getting screwed. Don't get screwed.

Re:Microsoft vs. Google: Cost

[MBGMorden]

Thing is, Google IS NOT MS Office. That alone is gonna take a huge bite out of their market. We've already got OpenOffice.org (which I'm convinced would gain 3% more market share if they didn't have .org as part of the product name. Stupidest decision I've seen in a while. :)). It is, for *most* people, a perfectly useable GOOD MS Office replacement. Now I know it doesn't do all the stuff Office does (having taught Office classes for 3 years I have a very good handle on what OpenOffice.org does not do), but for most users, it is perfectly fine, and is $0/machine/year x 28 machines for a whopping $0/year. Still: it is not MS Office, and so the uptake has been very, very slow.

Now THAT's innovation!

[dr_turgeon]

Actually, any strategy that gets M$ focused on yet another task, other than making better software, is a sort of innovation, isn't it?

Seems rather expensive

[dave562]

Given that Microsoft Volume Licenses for Office can get as low as ~$15 a month and with those you are entitled to use the entire program, paying $15 a month to rent the same thing is ridiculous.

The only way I would ever consider a long term payment program would be if I could own the software at the end of the year or whatever. Hell, if Microsoft were smart they might even be able to charge MORE in the long run. After all, Americans are used to paying interest for things, and spending more over the long run to get it NOW.

Pay-As-You-Suffocate

[denmarkw00t]

I really think that this isn't about "quietly testing the pay-as-you-go software model," I think its more about MS quietly trying to tie users in to yearly contracts and subscriptions. As Dell and others roll out desktops with Linux and with Linux gaining more of a "Hey, its not only not Windows but it actually is user friendly" kind of attitude from the general public (just turned my non-techie room mate on to Linux from XP and within minutes Linux had won her over), it looks like MS might be getting a little scared of losing users in the coming years, especially if Vista turns out to be a sore-spot for long-time XP users who were very comfortable, but now see themselves scared and naked in a world of Aero graphics and ridiculous hardware requirements.

If I were MS, I'd want to hold on to some kind of user-base, and why rip people off $300 at a time if I can charge $15/month for a two-year lease, thus even if they don't want to use my software it doesn't effect me as I get paid whether they use it or not. And what about the stranglehold they'll have selling subscriptions to businesses and institutions? What? You need 500 copies of Office? Well, we can work this out = $$$$ for me, for years, guaranteed.

The only thing striking me as 'news' to this is that MS didn't do it sooner.

Re:Microsoft vs. Google: Cost

[OmegaBlac]

We've already got OpenOffice.org (which I'm convinced would gain 3% more market share if they didn't have .org as part of the product name. Stupidest decision I've seen in a while.

There is a reason that it is this way though >> http://www.openoffice.org/FAQs/faq-other.html#4/. They would have to completely change the name if they wanted to drop the .org part.

Closed Source Software is Already Pay As You Go

[Greyfox]

Every IT department on the planet is on the upgrade cycle. A lot of home users only upgrade when they buy a new computer but they eventually DO upgrade. "Buying" the software doesn't really buy you a whole lot other than the first sale doctrine that most people never exercise. Possibly it's first sale doctrine people that Microsoft's trying to eliminate but more likely it's just a way to get a more odious license manager and DRM onto your computer. Or possibly it's an attempt to own the data that you create with their software in addition to owning their software. In any event you're paying a recurring cost to them on a yearly basis for their software whether you realize it or not and you would be unwise not to run the numbers and consider the risks when accepting any additional modification to the agreement you have with them.

Re:Microsoft vs. Google: Cost

[MBGMorden]

Yeah I'm aware of the reasoning. Still, I'd be all for changing the name rather than tacking on .org onto the name. It just doesn't make sense. It'd be like if Wal-mart had found out somebody else had the name just just settle on "Wal-mart St." instead. They should have just found another name.

Dumb idea - for the consumer.

[Anonymous Coward]

Personally I won't use this unless forced too. #1 what happens if you don't have an internet connection (and who here has NEVER had a down-time?) and #2. Some things I do, are confidential. I'd be held responsiable if something happened to that document, so it has to stay on MY computer, not some company like MS. What happens if MS decides to shut this down? How do I get my files back?

No, I'll keep using OpenOffice, and MS can go out of business for all I care. The idea of using the internet and 'rent' software is a stupid idea.

And as some showed here, the cost is prohibitive.

- Kc

Full Circle

[nurb432]

Remember when Microsoft was the 'alternative' to having to lease time on the mainframes?

It wasnt such a bad business ( and security ) model after all was it.

Economics

[Anonymous Coward]

Looks like this is essentially a tax on people who suck at math/economics.

Assumption: Significant Upgrade Required after 3-4 years

Case #1: 'Renting' the software

15.00/mo * 12 mo = $180 * 3 years = 540.00
residual value = none

Case #2: 'Owning' the software

-Initial Investment: 240.00 (say a full version of office, @ retail, standard version)
-Residual Value After 3 Years: 50-80 (worst case, based on Office 2003, standard, ebay prices)
-New Investment: say 280.00 (again, another new full version, upgrade versions have significant discount), 15% allowed for inflation.

Oh, look here, even with purchasing a NEW version (not upgrade), I come out EQUAL, and if I factor in the possible
RESALE, 'Owning' a license works out to be CHEAPER.

But, then again, theres 3 years of lost guarenteed revenue for the company, and that pesky 'piracy' aspect that comes from people physically owning media.

The future is already here with cellphones, that you don't own, but rent. Get ready to slowly get rid of 'ownership' of your computer, and your data.

Again, welcome to the future. 1975 called, it wants if dumb-terminal/renting computer time concepts back.

Just applying Heroin Marketing Principles 101

[sizzzzlerz]

First taste is free. Then, we own your soul.

And the poor get poorer

[Baavgai]

Consider, the areas in the US that support the rent to never own stores are those far below national average income levels. In those same areas, you can find light bulbs sold by the each. Cigarettes are also sold in singles, though it's technically illegal. Why is this bad?

In every case, the person pays what they can afford right now, but ultimately ends up paying more over time. It's interesting that such a strategy is being test marketed in countries seen as needing a financial "break". This is a tactic that essentially takes advantage of those who can't afford up front costs.

Almost makes sense.

[rnturn]

My first thought was that it might be nice to be able to "rent" Office by the month. For example, you're working on a contract and you need to be able to exchange documents with other folks but only for the duration of the contract. Paying for the use of Office for a short time almost makes sense.

But then I remembered: Uh, wait... I don't use Windows any more. What would I run their stinking software on? Now I'm sure that somewhere within Microsoft -- behind locked doors, heavily armed guards, and a radioactive moat -- there's a version of Office that runs on Linux. Perhaps it'll see the light of day. Nah! It'll never happen.

But even for people that still use Windows (there a few of them I guess), what would be the point of having temporary access to Office? You've generated documents and, surely, you're going to want or need to access them some time in the future. Are you going to call up Microsoft and rent Office for a month so you can find and print that document you wrote last year? No. You're going to want a copy of rent-free Office so you can get at the document NOW not when Microsoft finally recognizes your credit card information and grants you access. And, of course, Office's infamous lack of backward compatibility would, someday, bite you since you'd eventually have documents that your rented copy of Office wouldn't be able to read.

This is just another solution in search of a problem. It only makes sense if the file format is static -- and Microsoft is incapable to leaving well enough alone as it means nobody's forced to buy new versions of the software -- or Microsoft finally discovers that interoperability means more than being able to pass documents to someone else running the same version of the application that created them.

Re:Microsoft vs. Google: Cost

[Anonymous Coward]

My suggestion, they could name it "firehippo"!

I am happy with rental software...

[Omnifarious]

As long as it's Open Source. That way I'm not locked into paying a particular company to use my software for some arbitrary period of time. With Open Source I'm clearly paying a 'rental' fee for continued work by the company that makes the software.

Microsoft has two major problems. First, I'm locked into their software by the data. And that's never going away no matter how much people talk about 'open' formats. The only way it will go away is if Microsoft abandons its current Office product line because those products are intimately tied to their development histories and it's quite clear from the OpenXML spec that they can't actually make an open spec without releasing all the source code to all the older versions.

Secondly, why even have copyrights on the binaries if you're charging a rental fee? If Microsoft really wants a rental model, they should just tell people they can give away copies so it's easy for new renters to get a copy of the software. The only reason I can see for restricting copying of the binaries themselves is if they intend to charge some kind of up-front 'ownership' fee. And if I'm doing that, why am I renting again?

LoL

[Bellum Aeternus]

Ooh, ooh, a good (from management's perspective) reason to use Google's new "Office" software! If Microsoft is doing it, then what Google is doing must be viable and legit, right? Well, I can hope they see it that way.

Yes, but bribing the MS inspector is still cheaper

[Sad Adam]

Are they serious? Why would you rent when you can buy for about $5 in all of the countries mentioned. And when the Microsoft inspector calls, it is still much cheaper to make a one off payment of $50 directly into his pocket that worry about what someone in mythical Seattle might think

Greed

[zoeblade]

However, for places where the price of software keeps obtaining legitimate versions out of most people's reach, a rental program may be a useful alternative.

So basically this translates as: "We make up an arbitrary price for software, which costs next to nothing to mass produce. If you can't afford this high price, we'll charge you a smaller amount on a recurring basis, so that in the long term you end up paying more than other people who have more money than you do." How thoughtful of them.

But It's OK For Google

[BSDetector]

We can pay them more than 3x than what MS charges and we love it!

HOSTS: feeserver.microsoft.com 127.0.0.1

[DrYak]

And it begins...

And suddenly, hacked "fee-verification" servers, that can be run as local host, began to appear.

Ah what a better way to show vendor lock in

[tomstdenis]

Stop paying your rental fees, lose your files. Ah, what a beautiful industry!

Tom

Obivious pun

[Bocconcini]

So the current "Pray-As-You-Go" operating system isn't doing it any more?

How about...

[Tatsh]

Open source FREE software where everyone (who wants to) contributes? I don't get how they are going to convince anyone who isn't paying now to pay for software or ANYTHING for that matter. All those "dev'ers need food"-type statements to scare people just DON'T work IMO.

Analogies

[wellingj]

This is like renting to the the poor and charging just enough so they
can have a place to live, but never own a house and is flat out wrong.
What a money grab from Microsoft. The next step is renting your OS and
effectively your hardware to you.

Why can't they just charge less all the world around? Seems like
corporations and industry organizations are having a problem with
understanding supply and demand these days.

Re:Analogies

[BSDetector]

Hey buddy! Google is charging $50/month. Why no outcry for them?

Re:Analogies

[Anonymous Coward]

*year

Re:Offtopic? WTF is wrong with moderators?

[Anonymous Coward]

This is why I wait a bit before posting. The first post, regardless of whether it's a "FRIST PSOT" or an actual relevant (or perhaps even thought-provoking) comment, will be modded as Offtopic.

Re:World of WORDcraft!

[Psykechan]

For only 15 dollars a month, you too can play the hottest game around. World of Wordcraft!

Please remember to feed your search mutt regularly or his loyalty will drop and he will start giving you less useful results.

future microsoft pay or go notice

[freaker_TuC]

Dear customer,

Your subscription has ended, for the sake of your data, pay or go!

With regards,

Microsoft.

It does not going to work

[carlosap]

I live in Mexico City, and I dont think is going to work, mainly because piracy. With 15 dollars you can buy office 2007, windows vista and other software bundled in one DVD and you can easily go to downtown to buy it. Mainly because the average income is very low like 4 dlls a day ( 8 hours work ) So beleive me Mexicans are not going to pay software if they can get it for "free" And they dont use openoffice or any open source sw for the same reason