The Productivity Software Subscription Model...some thoughts on...

For a number of years we have been selling a version of ActiveWords that we call the ActiveWords for the Enterprise. The price is basically $30 per seat per year. We have a fair number of customers, and would always like to have more.

We carefully outline the difference between the two versions. We provide more tools for this version, and try to make sure that enterprises understand why this is a better tool for them. I know our logic has always been that building a subscription base business would be better for everyone, for us and for our customers. This type of model would allow us to have steady cash flow, and at the same time insure that the customer always has the latest version of what we are building.

I was just reading an article in the online version of the WSJ related to Microsoft’s “Albany” offering by which Microsoft plans to allow for a subscription based version of Office. It will be interesting to see what is included in the offering. There is no mention in the article as to the pricing, etc.

When I gave a talk at the Office 2.0 conference last fall, my thesis was that unless offerings like this offer more than what is typically offered, I am not sure what the incentive is for the software buyer. There are a lot of very smart people at Microsoft, and it will be interesting to see what direction they go. Their success will provide guidance for those of us who would like to see this model succeed.

When I have talked to a number of our customers, most are very reluctant to use on-line versions of productivity type applications. Their logic being that if they have say 30 employees, and one computer is down, then they have a problem, but if the network is down, particularly when it is running network applications, they have 30 problems, and their employees begin to doubt the thinking of leadership, and things unravel from their.

All have told me that that would wait a couple of years before ever adopting these kinds of tools.

It should be interesting to see what happens as these types of tools are introduced by Microsoft, Google and others.