Microsoft continues to move in software as a subscription service. Many of Microsoft products are being developed with parallel streams: On-premise or Online. This Windows 365 is the latest development in that strategy. Many media commentators quickly jump to the negative conations – Microsoft will get everyone to use the software for free then slowly charge a fee then jack the price up. A few cable TV subscribers may recognize this pattern!
Why would Microsoft develop software subscription model anyway? Is there a sinister plot going on? I suspect this biggest driver of this strategy is software piracy. Software piracy is a funny thing – it’s basically a whole bunch of potential customers. They’re potential customers because they like your software – they just don’t want to pay (or can’t pay).
West Monroe has worked with team’s inside Microsoft on developing ways to analyze and reduce worldwide software piracy. Software pirates, spammers, and hackers are a relatively small – but constantly evolving group. In the best case, these groups aren’t paying for software, they also aren’t paying taxes (that are used to build and maintain infrastructure, schools, public safety, etc.). In the worst case, these groups make changes the software (for future identify theft), sell the pirated software and use proceeds for other less than desirable activities. I’m sure there are some modern day Robin Hood styled software pirates out there – but definitely a small subset.
All pre-2000 bubble software companies, like Microsoft, the quicker they can convert customers from software CD to software subscriptions it will be a win/win/win. Win #1, reduce piracy by reducing CD copies. Win #2, ensure more customers are protected from hackers with the most current software by pushing out updates to subscribers. Win #3, bringing in more customers who used to do business with the software pirates.
Let’s hope Microsoft has a super smart Marketing team that lands the right pricing model. Microsoft needs to continually burnish its image as a really good value (compared the cost of a Windows PC with a Mac?). Raising subscriptions and adding a bunch of features nobody uses and they risk being compared to a cable TV provider!