Microsoft PAYG patent

MJF has a piece about a recent patent MS got for pay as you go computing of some sort.

I was going to leave this comment there but there were far too many hurdles to leave a simple comment.

This might be appealing to groups who can’t afford netbooks.

Microsoft has no current software targeting this form factor – Vista is too resource greedy, Office 2007 UI is too screen greedy. Win 7 is not going to fix this.

I think Linux netbooks are the main competition for this PAYG, and IMO are much better. I have Ubuntu netbook remix on my Acer Aspire One, its superb.

With corporates pulling out of SA and EA, I think Microsoft subscriptions are proving to be unpopular. Possibly because of the ‘OW starts now’ with EVO (Exchange Vista Office in 2007).

Thats my view, I’m not a fan of rentals, what do you think?

Is renting software by features used/needed radical and new and exciting? or not?

I think MS need to do something to target netbooks – OS and Apps. My kids got Linux netbooks for Christmas and are now learning OOo not MSO, Firefox not IE, Linux not Windows. (in fairness they are just playing flash games found through google!)

Maybe MS should resurrect Office 2003 (as they did with Win XP – just for netbooks) – at least that UI can be customised to work on a 600px high screen.



14 Responses to “Microsoft PAYG patent”

  1. Harlan Grove Says:

    Re your (or any) kids and software – isn’t the important thing teaching them how to read, write, organize thoughts, perform simple calculations? Unless they’re programming, what’s the big deal?

  2. jonpeltier Says:

    “I was going to leave this comment there but there were far too many hurdles to leave a simple comment.”

    Which is why I hate the site Mary Jo writes for. It’s also a royal PITA to read the comments.

  3. Dennis Wallentin Says:

    My kids also got Linux netbooks for Christmas and since they have used Linux for the past nearly 4 years there was no transition problems.

    I must honestly say I really like what I see with these netbooks although they are too small for myself to use, screen width and keyboard size.

    I don’t think MSFT can challenge Linux on this platform and they should not try to do it.

    Kind regards,

  4. Simon Says:

    Harlan – thats a good point, but somebody must see it as a big deal, or why did Ms get in on the OLPC bandwagon? And why the big educational discounts from Apple? charadee?

    Jon – totally agree. Needing to enter name address DOB, inside leg etc etc just to post a 50 word comment really suggests the social network is not working, spammers won.

    Dennis – I think 200 GBP/EUR is stunning value for a fully featured ultra portable laptop. I carry a work laptop (Win XP/Office) high spec, and a netbook for internet stuff so I can keep my dev box off line. One day I may virtualise the lot on one physical machine, one day…

  5. sam Says:

    Is renting software by features used/needed radical and new and exciting? or not?

    May be we will see this is Office 15.

    Do you want to have classic menus : No- Free : Yes Pay
    Do you wan to see more than 64 K lines – No (free) : Yes (Pay)

  6. Harlan Grove Says:

    Cynicism warning – Microsoft and Apple don’t mind changing a few dozen times their marginal costs for academic licenses rather than hundreds times for commercial licenses. Apple has a lot less to fear from this than Microsoft since Apple sells hardware, and since Apple has been selling computer systems to schools at a discount for decades (at least here in the US).

    So charity from Apple? Yes, a case of LONG TERM enlighted self-interest.

    From Microsoft? Nope, it’s just pure reaction.

    If companies and governmental entities ever take action on the fact that the 80% of worktime computer users who use 20% or fewer Office features could get along quite nicely using Linux boxes, Microsoft will implode. There’s no similar implosion scenario for Apple. So Microsoft’s future depends on inertia, and they have to do as much as possible to maintain that inertia.

  7. Charles Says:

    Optimising pricing yield is always about finding ways of matching your price to what different market segments can afford to pay.
    And software like Office takes a huge amount of resource to develop but virtually nothing to manufacture so there is a lot of scope for creative pricing.

    My personal view is MSoft is in already in an unsustainable position as hardware prices continue to fall and MSoft needs to take a larger and larger % of the sale price, and of course MSoft know this: so IMHO they cant afford to ignore the bottom end of the hardware market because thats where the volume gains will cone.

    So I would expect to see more and more pricing initiatives:
    – more SKUs
    – Office pricing by the number of features you use
    – increasing use of rental/useage models rather than purchase
    – …

  8. Harlan Grove Says:

    First off, we’re talking about individual retail buyers. Enterprise buyers (commercial or governmental) pay once per year already, but that includes upgrades, and I doubt MSFT would ever be able to make that segment pay per hour or per feature (aside from SKUs with or without Access).

    Rational individual retail buyers, at least in the US, would buy Home & Student, which means they live without Outlook and Access and in theory can’t use Word, Excel or PowerPoint for commercial purposes. Anyway, that’s about US$150, and it can be installed on up to 3 machines at a time, so as low as US$50 per machine. At that cost, it’s cheaper to buy Access separately if you just gotta have it than buy any of the SKUs that include it.

    Other than wishing, hoping and praying that potential MSO buyers remain irrational, MSFT already has too many high-end SKUs. Or is MSO 2007 Ultimate intended for people who want to show off how much they spend?

    As for more low-end SKUs, the only prospects I can see are reduced features. So let’s consider this possibility: how much would any of the rest of you pay for Excel without VBA support? Without VBA, OpenOffice Calc’s regular expression support and relative/absolute worksheet references start to look awfully attractive compared to various bits of Excel worksheet functionality that are still stuck in the 1990s. So if not VBA, what other features could you pull from Excel without making OpenOffice Calc more attractive?

  9. Simon Says:

    Free web based office?

  10. dougaj4 Says:

    What would I pay for Excel without VBA?

    Not a cent more than I have to pay for Open Office calc or Gnumeric.

  11. Giles Says:

    @Harlan, @Charles – you’ve hit the nail on the head there. Software pricing is either a nightmare or a delight, depending on how much you enjoy trying to play with the psychology of your clients :-)

    On the one hand, the marginal cost of production of a copy of your software is as near zero as makes no odds, so basic economic theory tells you that the price should be zero under perfect competition (ie. if we forget about inconvenient things like copyright). On the other hand, the capital cost involved in building it is high, and these pesky developers insist on being paid for their work, so you have to get money somehow. So companies spend hours trying to work out the best pricing structure, which is losely defined as “charging everyone as much as they’re willing to pay”. Rental is one (perhaps quite good) way of trying to achieve that.

    We have frequent debates about whether our price point for Resolver One (currently $399) is right, and it’s very hard to get hard data – even trying to work out how to measure how sales vary with price is well-nigh impossible… because if you increase the price and sales drop by 50%, how can you know whether it was caused by the price increase or, say, a crash in the financial markets?

    Simon – how did you decide on the price for your commercial products?

  12. Simon Says:

    Did you read the piece Joel did on using exchange rate variances to mimic price movements. I don’t remember the detail or if he came to a string conclusion but I remember thinking it was a good idea.

    I agree price is V difficult, I just guessed what sort of price people would be happy enough to pay. But price also defines market, too cheap and people assume its rubbish.

  13. Charles Says:

    For most of us relatively low-volume guys the dominant factor in SW pricing these days is marketing, the development cost is largely irrelevant.

    If you are going to pay people to sell your product then it needs to be expensive.

    If you are going to spend money on marketing but not selling then it needs to be moderately priced.

    If you aren’t going to spend anything noticeable on marketing or selling then the price needs to be reasonably cheap, or even free if you are just having fun or looking to build a reputation or market presence.

    Within those bands you can fine-tune according to value-add, market niche, competition, similar kinds of products etc.

    Then tweak according to SKU packaging, volume discounts, third party incentives etc.

    The bad news is of course that there is no real way of knowing how wrong you have got it …

  14. Giles Says:

    @Simon – No, I don’t think I remember that one – Joel Spolsky, right?

    However, I posted on my blog yesterday after making this comment to see if I could get any interesting feedback on the right pricing for us, and was pointed at the software pricing questions on the Joel On Software forums’ FAQ, which have a lot of good stuff (and a couple of pointless flamewars):

    @Charles – Absolutely! At the JoS forum page above there’s also a link to Joel’s post on pricing, entitled “Camels and Rubber Duckies”, which is well worth (re)reading: – he makes much the same point.

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