Is the software license dead?

TalkBack 22 of 26:: Next »; « Previous

Thread View
Flat View

Back to the future: Back in the days of mainframes, companies typically licensed products on an annual basis. The cost included all maintenance. That did not mean that when the company released some fixes, you got them. It meant that if you had a problem due to a bug, they fixed it for you. And you got the other fixes too.

Companies typically licensed software based on the overall computing power of the mainframe. If your system supported 1000 concurrent users (and thousands more idle users who were not using that software at the time or not logged on) would pay a fee for that machine size.

As times changed, so did license agreements. Some vendors started selling on a per user basis, or on a concurrent user basis. Some collected a one time fee, but clients would pay an annual maintenance fee - if they wanted support, of course. Many even had some features that were licensed a-la-carte. A customer got an activation code for each feature, along with an expiration date.

When the PC became more popular, people switched to desktop software. Initially, it was expensive ($300 for a primitive spreadsheet OR word processor. Not for a suite.) But the support was there. As for the "license agreement," software was protected by copyright. There was an agreement in the box, but unlike software of the past, nobody signed a contract. And giving somebody something to agree to after the purchase was executed was not very meaningful.

Companies switched to PC software to save money. Some said it was to increase productivity, but it was really all about the bottom line; if your productivity increase did not translate into a dollar savings, it was not worth it.

Often the savings was not there. Expenses went down dramatically in MIS budgets, and went way up for each department. Software support gradually disappeared. Users could no longer call up a company for free, tell them of a problem, and get a fix coded for them. Prices went down, but users paid for it in productivity. Nobody counts as an MIS expense the time that your buddy in the next cubicle spends helping you out when your computer crashes.

The PC software model of licensing was simple. You paid for it once. You kept it as long as you wanted. In theory, you kept it forever, but in practice, you kept it until you bought the next upgrade.

We started moving away from the old mainframe models. I remember when an MIS director in the PC group told us how our new mail client was "almost free" at under $50 per copy. The mainframe software was $20,000. But $50 here and there adds up pretty fast. Since we had more than 400 users, the "almost free" was really much more expensive. But the MIS group did not pay for it, or deal with the support headaches.

The current license agreements were driven by cost. The idea was that companies needed to make the bottom line selling price as low as it could be per user, even if the ultimate cost was much higher because of lack of support and lost productivity. Everybody knew when the mainframe went down, and how many thousands or millions of dollars were lost. But nobody figured that if the PC crashed several times a week, and the average amount of time lost per user was greater than for a mainframe crash, the money lost was higher. So reliability was not a driving force in license agreements.

Now we have an article discussing "new" licensing schemes. But many of them are no different from the old strategies. Customers don't want to pay for what they don't need or are not using, and we now know that we are wasting far more money than ever on software.

What we need is good, reliable software that does what we need, does it well, and is affordable. Making people pay for a suite is fine if that's needed. But we all know that it was a marketing gimmick. When suites were introduced as a $120 upgrade from an outdated word processor, it made sense. As the competing suites got even cheaper, it still made sense. When the competition all but disappeared, suites such as Office climbed through the roof in terms of price, and gave many users things they will never need. This model is not cheaper. It does not help the user.; Posted by: wresnick Posted on: 10/20/04 You are currently: a Guest | Members login | Terms of Use