Microsoft Testing "Pay-As-You-Go" Software 202
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.'"
Microsoft vs. Google (Score:4, Insightful)
what about my data? (Score:5, Insightful)
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:
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.
Renting for businesses (Score:2, Insightful)
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.
Ok idea, wrong price (Score:3, Insightful)
MS New Business Logan Leaked (Score:3, Insightful)
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Google's business model on apps. (Score:5, Insightful)
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.
Obsession. (Score:5, Insightful)
Their fundamental obsession is with establishing continuous revenue streams.
Re:Pay as you go sucks. (Score:4, Insightful)
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.
out of most people's reach (Score:2, Insightful)
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.
Re:1 Year=$180 (Score:2, Insightful)
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.
Will it work? (Score:3, Insightful)
Re:1 Year=$180 (Score:2, Insightful)
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:what about my data? (Score:5, Insightful)
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:1 Year=$180 (Score:3, Insightful)
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:what about my data? (Score:2, Insightful)
If you're not running windows, maybe this article is of no interest to you, m'kay?
Re:Obsession. (Score:3, Insightful)
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:1 Year=$180 (Score:2, Insightful)
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/FX101
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 (Score:3, Insightful)
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:
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:Microsoft vs. Google: Cost (Score:4, Insightful)
Re:what about my data? (Score:3, Insightful)
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.