The Static Page

Licensing, The Next Generation

Many people are accustomed to a pay-once arrangement for software. This gives them the software on some computer-readable media (today, almost always on CD-ROM) and often some packaging. Most of the time, the software can be installed wherever they like so long as required software is also available. In other words, it gets treated practically like a book. And people expect to be able to do things with software media that you can do with a book: re-install (re-read) it as required, re-sell it to someone, lend it to a friend.

Unfortunately, practically all software vendors haven't sold software like that for years. Instead, they license it to you and this license usually says you can't treat it like a book. Some licenses expressly forbid you from selling it: once you've bought a copy, you can only use it or discard it. Amongst other things, if you no longer need it, you can't let your Aunt with an elderly computer to use it instead. No, she's expected to buy a new license. Many end-users don't expect this. But it is one way software-vendors usually achieve a revenue stream from a prodcut. The other, closely-related way is upgrades.

Enter Microsoft. Upgrades of their two main products, Windows and Office, have made so much money for Microsoft that they're referred to as "cash-cows". But it's not an infallible revenue stream because it creates huge demands on the developers to create a next version that is worthy of upgrades. And to protect the revenue stream, it must be timely to market and price-effective.

Enter Office XP. The biggest news about this is that Microsoft are changing the licensing model. Relying on users to want to upgrade is too risky, so they are going to switch to a subscription model. Lots of things are already available on subscription-type arrangement: train tickets, magazines, mobile phones, internet access. Now Microsoft wants Joe Public to accept computer software in that list.

It's not a new concept for software, incidentally. Mainframe software is customarily licensed like this. But PCs didn't develop out of mainframes. And the hobbyists who started the industry saw no need and had no means to burden PC software with subscription-type licensing.

Enter ".NET". At this point, I am unclear as to what Microsoft are selling. Certainly development tools are at the forefront of it all, but I'm skeptical as to how this meshes with Microsoft's larger plans. It has been noted that Office will become Office.NET at some point. How this works is still up-in-the-air, but everyone seems to be guessing at some sort of Internet version of Office that runs mostly from a server somewhere.

Is this such a surprise? I mean really? It is the standard way ISPs and web-hosting companies run their business. Your web site's content may be yours, but the technology running underneath it isn't. You merely license it. It goes practically without saying that shifting to running Office like this will be an interesting transition to watch. But there's no denying that it creates a regular revenue stream.

I guess it remains to be seen what everyone else will do.

Wade Bowmer, aka Static

Comments? Email me at static dash page at yceran dot org.