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October 10, 2004
The Trouble with Software as a Service (Part I)
How many technology-related monthly bills are you paying? Cell phone, Tivo, XM radio, etc. etc. For many people this is becoming not insignificant. A generation ago people made three monthly payments -- mortages, utilities, and newspapers -- and now the average American pays 12 bills a month, most of which have to do with technology.
Vendors (and investors) love subscription-based business. And what's not to love? We have all learned the Gillette lesson well: Give away the razor, and make money on the blades -- and if you can get people into a monthly razorblade contract .... well, so much the better.
But there is a revenge effect in the works. The success of subscription billing means that consumers are increasingly becoming tapped out on monthly payments, with many people spending $250 a month and more on such bills. That eats into discretionary income in a hurry.
And then there are cussed and contrarian sorts like me. I actually look askance at people who insist on charging me monthly tithes for the privilege of using their software. Call it a service if you want, but I want to be able to choose between paying as a service and paying a one-time fee. Yes, I understand I might get socked again if/when I choose to upgrade to a subsequent version. But that way the billing happens on my schedule, not the vendor's. I have decided against three software purchases lately -- one of which was a slick synchronization product -- because they insisted on selling to me subscription-style only.
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