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By Mark Hachman  |  Posted 2003-10-07 Print this article Print
 
 
 
 
 
 
 


Publishers will have the option to mix and match business models, as well. For example, a software publisher may choose to provide a customer with a 100-seat license with the ability to shift into a utility-based "overdraft" model during a critical programming period, where additional users could be accommodated, Stickel said. On the flip side, IT managers will benefit from being charged exactly how much their user base uses the software, Stickel said. For example, customers are often unable to connect to hosted applications such as Salesforce.com through some client-side problem, such as routine maintenance or a network outage.
The FlexNet software will also have the ability to allow limited feature-level pricing, where publishers will have the ability to charge for additional features—or where IT managers will be able to purchase only the features they actually use.
That may create some sticker shock, Stickel acknowledged, as customers work out new estimates of what software they will actually use. On the other hand, Jacqueline Woods, vice president for global licensing and strategy at Oracle Corp., said that her economics background had proven that utility pricing only works in specialized cases. For example, cable television is considered to be a utility, although a customer can watch 1 minute or 100 hours per month and be billed the same price. A true "utility model" is based on the electric company, which uses a "lights-on, lights-off" model to regulate customers. "In terms of my economic background, Ive found that customers end up paying more money," Woods said, and that the typical per-unit cost actually goes up. Instead, Woods said, customers will probably opt for something like an 80-20 split favoring traditional "perpetual" licenses to software, with the utility model kicking in under specialized conditions, such as the crunch right before a deadline.


 
 
 
 
 
 
 
 
 
 
 

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