Issue 223, July 9, 2001  

Subscription Software:
A Ticking Time Bomb?

By Stephen M. Lawton

      Do you remember the gorge scene from the final installment of "Back To The Future?" The steam engine was heading to the edge of the gorge and Doc Brown figured that the train would reach 88 mph and return to the right spot in the space/time continuum to push the Delorean time machine into the future before it went over the cliff. Fortunately, the Doc was right and all lived happily ever after.
      I can't help but think that Microsoft's new subscription software service is a lot like that. If you calculate correctly, you'll get the updates you need for "free." If not, well, I hope you like train wrecks.
      According to Microsoft, this is a great deal for corporate users who need to buy site licenses. You don't have to back up a U-Haul to the local computer store and fill it with software, just so you have the right number of licenses. That's fine — assuming you want to pay Microsoft every month for your mission-critical software. Your other option is to buy the traditional perpetual license, but you'll get nailed for the upgrades at full retail, which will be far more expensive in the future.
      It appears that Microsoft is plunging into the same murky waters that got IBM into antitrust trouble years ago for selling software subscriptions. A court stopped the practice then and there's no reason to believe that won't happen again, especially with Microsoft's luck in the courts.
      Immediately, you've seen the end of the "competitive upgrades" and version upgrades, unless you buy into Microsoft's new Upgrade Advantage program. The program will be part of .NET, due out next year.
      Microsoft knows that there will be fewer significant upgrades, and companies that already have stable environments will not be running to buy new and untested software, so this is a good way to assure a steady income. But this is a bad precedent to set, for Microsoft or anyone else.
      Microsoft isn't the only company jumping on the subscription bandwagon. You can already hear the groans of eBay users because the company, without warning, discontinued its support for its Auction Assistant Pro, for which its users paid up to $200. It was replaced with Seller's Assistant, which will be offered by subscription only for $5 a month — or $15 a month for the "Pro" version. Expect other companies, including Oracle Corp., to follow suit. After all, why sell a product once if you can get users to pay for it in perpetuity?
      So it all comes down to this: Will corporate users opt for the perpetual license and bypass "upgrades" or will vendors bleed companies and individuals alike with subscription schemes? Microsoft acknowledges that if you use your software for five years or more, the subscription service is more expensive. Consider: If you had to pay just $5 per month per user for every piece of software you use, regardless of its version or age, would you? A better question might be: Could you?

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