Subject: Re: microsoft educational licenses
From: Bob Weiner <weiner@altrasoft.com>
Date: 01 Sep 1998 23:20:47 -0700

>>>>> "FH" == Frank Hecker <hecker@netscape.com> writes:

   FH> Of course the catch is in the "perceived as".  What Microsoft has
   FH> actually done (I suspect) is not really setting the initial right-to-use
   FH> license fee to zero, rather they've totally eliminated the concept of
   FH> having a perpetual right-to-use license in the first place.  In other
   FH> words, if the customer fails to pay the annual fee at some point, they
   FH> have no further legal right to run the software.  As I noted above, this
   FH> to me is indistinguishable from "software rental" as practiced in the
   FH> IBM "Big Blue" monopoly days.  (A coincidence? :-)

Sun has recently adopted this model as well, see the developer tools link at
www.sun.com.  They want to dramatically bolster the set of developers using
their Java toolsets and their operating system so they bundled them all into
a loss-leader-type package with several constraints that will prevent the
offering from cannibalizing their corporate sales and leading to unlimited
usage:

	1. If you let your renewal license lapse, your existing user license
	   key will expire, preventing you from using the existing versions
	   of the tools;

	2. The package is for individual users only and corporate buyers
	   cannot buy multiple instances for entire teams.

IBM used to make a lot of money from renting software.  It was a good
business model while the market supported it.  Annuity-based businesses are
often most appealing for investors due to the high cost of finding and
selling new prospects.  Sun and Microsoft see that with their license
restrictions they can now offer solid value to clients and help ensure
continuing income streams.  Free software businesses do not have this
opportunity.

I think both Sun and Microsoft would shift from these models if the backers
of alternative ones presented them with large enough financial incentive but
such backers never seem to have the resources to do so because they are seldom
driven enough by money to actually focus for long periods of time on
gathering enough purchasing dollars to influence licensing policy decisions.

Now obviously buyers of these packages are sacrificing their long-term
freedom for short-term financial and productivity gains.  This is a rational
and pragmatic choice, though certainly not an optimal one.  This is why
Stallman and Gilmore campaign so tirelessly for people to protect their
freedom and privacy, because they are all too easy to give up.  But the
interesting thing from a business perspective is that potentially many
people, including myself, will accept such offers even though we value
our freedoms and privacy because we are also pragmatists and we believe
that we can move more mountains in the long-run by working within existing
systems rather than trying to invent all new ones, at least until we have the
resources needed to behave differently.  (This from a guy always called a
maverick during his career in corporate America.  You can still buck the
system but being an active part of it is often key to influencing it.  I
consider vendors a part of the system in which clients operate.)