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Now unless you are particularly interested in computer software, this most likely will be even more boring than my usual output.

I will start with a tale concerning two software companies who’s products I own existing licences for, Autodesk and Adobe and along the way I will mention Microsoft or to be specific, Microsoft Office but first about Autodesk…

Autodesk 3DS Max

Autodesk is best known for its Engineering/Architectural CAD programs. In case you don’t know, CAD = Computer Aided Design. Because of the way these programs work, 2D ‘drawings’ being able to generate 3D worlds, Autodesk also have a considerable interest in 3D animation products that are used in Film and TV for CGI -Computer Generated Imagery and now own the main brands – Max. Maya and Softimage.

I bought version 1 of the 3DS Max software back in the Autumn of 1996 and packaged with an ‘add-on’ it came to about £3,000 including VAT, building workstations that could run it properly was to cost an awful lot more over time. We are now effectively on version 11 and I have done every upgrade which generally was around the £750 mark each one.

However, a few years back around version 6 I think, they offered a “subscription” programme whereby you paid an annual fee that was equivalent to about 10% of the purchase price and in return, get every enhancement and upgrade for ‘free’, I bought into this. Despite many financial difficulties over recent years due in part to looking after my ‘aged Parents’, I have kept this going up until now, my renewal is due the end of November.

The problem is that this year’s renewal is about 15% of my original purchase price which is still about the same price in 2008 as it was in 1996 except, an awful lot more is included in the product but, I will not renew because it has broken a price/function barrier for me. To put that another way, if I were using it commercially, the price would matter less but in terms of my ‘functional needs’, it is more “nice to have” rather than crucial.

The Annual Licence Model

I think this is a far better way to go but it must hold to a 10% of the one off purchase price to work for the “licensee” whether that be an individual in my case or, a business with a number of licences.

To me the most positive thing about this business model is (hopefully), due to a steady income stream, the software company can develop better and ‘more thoughtful’ upgrades without the pressure to “launch a new version” whether good enough or not, just to get some income into the company. However, there is also a downside too which is specific to this kind of software.

Autodesk and most likely across all it’s products, will likely find that very few people/companies take every upgrade and there is a good reason for this. When it comes to sophisticated products such as Autocad, Max, Mayer, Softimage and so on, the actual “learning curve” from scratch for any new user is “HUGE”, you do not lightly do an upgrade unless it is simply ‘incremental’ – anything truly Radical will be avoided if it means retraining your staff!

Does This Invalidate the Annual Licence ?

The answer is a big NO ! However what it does mean is the need for a more sophisticated and multi-tiered approach based upon product “generations” and “user re-training” included in the annual fee charged to the ‘Licence Owner’ plus a matching “Operator Specific” program the same as “industry awarded qualifications” which may mean the individual paying an annual ‘membership fee’ for access to software and resources beyond just their current employer, CISCO has blazed a trail here.

The “subscription model” is right but the amount and degree of flexibility currently offered, is not yet sophisticated enough. Microsoft has always been bedevilled by “backward compatibility issues” which have prevented it from moving forward quickly on new operating systems, with the right multi-tiered approach, companies such as Autodesk could side step such obstacles to rapid progress from one version to another by moving to “generations and versions” of each perhaps.

Microsoft Office

Back in the 1990′s when I started in IT on the Helpdesk, the various elements of ‘MS Office’ were sold independently as software programs, Word, Excel, Powerpoint and Access. Then someone came up with the idea of selling them as a ‘bundle called Office or Office Pro’ depending on whether or not Access was included. This actually made sense on several levels:

The whole of IT Support across many businesses were already moving to ‘disk imagining’ as a way of installing/repairing new PCs rather than manually loading each program which took hours per PC, the time taken was reduced to minutes and could be automated. Having a “standardized” disk image, it made sense regardless of whether the particular user needed all the applications or not to install the whole suite particularly as the cost of the bundle was only a little more than one single program previously.

A Really Stupid Idea

As a keen photographer, my two absolute “must have” programs come from a company called Adobe and they are “Photoshop” and “Lightroom” and they have just launched new generations of both these and their many other products. However, I also own various other of their products concerned with video editing, sound, graphic compositing and web design which I would also like to upgrade in due course when I have funds available.

Unfortunately a few years back, Adobe decided that it was going to sell “bundles” of their software as “Creative Suites” each dedicated to a particular industry or type of output – web design, print design, video production. Now to be fair, from a pricing point of view, once you have bought into one particular suite of applications, the discount on future upgrades is generous however the whole scheme is fatally flawed.

I have been an Adobe customer for many years and there is no one suite that they offer that covers all my personal upgrade requirements so there is no price advantage to me in buying “suites” that contain software I don’t need because unlike MS Office, the bundle price isn’t that good, consequently I will have to stick to individual upgrades because it is both cheaper and more flexible for me.

Do Adobe Really Understand Their Market ?

Whilst this may seem and odd question, I have my reasons for asking it. With MS Office, the common “guesstimate” is that even within one application within the suite, the vast majority of users only get to use at most 10% of the in-built capabilities of the software but given the price point for rolling it out across a business of 500-2,000 PC users, it doesn’t really matter too much. In addition to this, whether MS Office, Open Office or any other, most users can switch from one to the other and handle newer or earlier versions in their stride, “office type products” are bread and butter software.

None of this is true when it comes to Adobe’s graphics products whereby the operator/user will most likely utilise 50-70% of the capability of each software application. These are complex tools which have a fairly steep learning curve and were never designed for casual users because not only do you need to invest a lot of time to master them in the first place but afterwards, you spend most of your working day using just one application or two applications.

Even if you could afford to run a design company with 2,000 users, there is absolutely no way that you would rollout the same £1,400 per copy suite to every workstation, it would be total nuts because even the specification of the PCs would vary according to the type of software you ran and the type of work being done.

How Industry Works

But it goes beyond this and unless changed since CS2, the whole suite has to be installed and authorized on one PC which makes even less sense because each application would normally be used by someone with a different skill set. Even in web design, there could be people who do the design work, programmers/coders, graphic artists and possibly web animators which is four different people, what are they going to do ? Take it in turns to use one PC or have 4 copies of an expensive suite the majority of which is redundant for each user.

The most ridiculous product is “Master Suite” which costs over £2,000 and contains a copy of all of their individual programs. Financially this is very good value for money but in practical terms, a load of cobblers because you really do not have the time to ‘master’ each and every program so, why bother buying it ? If you could deploy different applications on different PCs then frankly it would be a “real steal” but I don’t see Adobe allowing that !

Conclusion

Because of on-line authorization and validation, Adobe should be looking at an annual subscription scheme based upon a pick and match basis because it most likely makes sense for these type of specialist products. They should also consider on-going development and patching across several generations of their software so that currently you could opt for an annual contract based upon CS2, CS3 or the latest CS4. When CS5 is to be launched, notice is given that CS2 drops off the end.

These type of software businesses need a new financial model to work to that is income generating in a more reliable way.