Subscriptions: The Death of Version Numbers

Geeks love updates. Mainstream users and enterprise technicians hate it. It is no surprise that we have been and will continue to move head first into digital world without version numbers and visible updates. The subscription model is looming.

 

Google’s Experiment

Google is the company that made such a process popular. It is implemented in web products but first became visible due to Chrome. Chrome was the first consumer piece of software that slip streamed updates without notifying the user.

Chrome started its version-less model from the beginning

Chrome started its version-less model from the beginning

At first some bulked at it preferring to be notified and informed but since it was a browser and updates were crucial, not many made noise. Firefox followed suit after Chrome’s updates went smoothly and consumers were receptive to it. Then more firms took after that model.

 

Microsoft Takes After

Office 365 is now heavily pushed by Microsoft. Sure, it was around before Office 2013, but it was never pushed to home users. Office 365 now includes a Home Premium version is is being marketed very heavily by Redmond’s giant.

Office 365 is basically a rolling subscription of Office on an annual basis. You pay US$99 a year but you can install Office on up to 5 PCs/Macs. On the other hand, the basic box purchase retails US$139 but bears only a single use. The full comparison can be found below as compiled by The Verge.

Office 365 & 2013 Offerings - A Comparison (The Verge)

Office 365 & 2013 Offerings – A Comparison (The Verge)

Whether the 365 version is of better value or the usual boxed version is superior depends on the user. For homes with multiple PCs, the 365 subscription version is of great value. However, one must remember that Office is not updated every year, the usual cycle is about 3 years. This makes buying the 365 for a single PC/Mac a poor choice.

What is more important is that the aggressive pricing that Microsoft is pushing for the 365 shows their move towards slip streaming software updates. Office 365 provides the latest versions of Office no matter what it is. When Office 2015 or 2016 is released, 365 subscribers get the new version automatically for ‘free’ (obviously they pay the annual subscription as usual).

This is a new model based on the success Google found with Chrome. While Chrome is a free product, Office isn’t and we’re looking at an emerging price model. It has been rumoured that Microsoft wants to take Windows along the same path. It is quite a stretch but it makes sense. Whether Microsoft can pull it off for its largest product base is another thing.

So what makes ignoring version numbers and heading to a subcription model compelling?

 

Easing Security and Partnership

Security updates will no longer be an issue. For years, Microsoft has been plagued by issues that are down to two major points.

  1. Microsoft controls less of its products to allow developers greater space. This has allowed it to become a monopoly in both the OS and Office markets. This also has allowed more vulnerabilities to be present.
  2. Windows and Office are thus heavily targeted by malicious hackers due to its massive install base.
Have you seen this and went 'I wished I never had to update?'

Have you seen this and went ‘I wished I never had to update?’

With automatically slip streamed updates, Microsoft’s name would not be at the mercy of whether a user decides to update his system or not. I personally have never been compromised because I am a savvy user. Not so for the large majority of Windows and Office users out there. This will be a blessing for Microsoft and other companies who take up the same model.

It will be great for developers as well. Imagine never having to worry about developing for multiple versions of Windows or OSX or Android. Developers would have a field day creating better software without worrying about backwards compatibility. Legacy support can bite the dust.

 

Legacy support can bite the dust.

 

Great for Profits

A subscription model is awesome for profits. This deals with the psychological placement of the product. When a consumer accepts a subscription, they tend to shift the purchase from a variable to a fixed cost. This means, they see subscriptions more of a must have rather than one that they can decide to buy at every new iteration. The choice is first made and kept constant. Some users even forget they are on an auto renewable subscription and just stick on because they are already in it.

Subcriptions: Balmer wants Microsoft to be a services and devices company

Subcriptions: Balmer wants Microsoft to be a services and devices company

Either ways, this spells enormous profits for companies who take up this model. After Microsoft brazenly announced that we should be viewing them more as a ‘services and devices’ company, rumors sprang about the Xbox and Windows tablets to go on an aggressive subscription model.

 

Are you more likely to buy a device that costs $299 with a monthly $19 subscription for 2 years or the device on its own at $699?

 

Are you more likely to buy a device that costs $299 with a monthly $19 subscription for 2 years or the device on its own at $699? The answer is simple, the former will get the nod and the former earns the company more money and also a 2 year loyalty lock in.

 

Bad for Quantum Leaps

The issue with such a rolling model is that you cannot afford to make huge radical leaps. You cannot make a buyer sign a contract only to update his software with something radically different. That would come mostly as a shock to users.

This limits the space for innovation by a company and to me this is a major point of consideration because as my background suggests – I like to see firms trying new things all the time, bringing great, new ideas to the table and giving consumers the widest variety of choices.

 

Other Firms

This model of ignoring version releases and going directly for a subscription model would work for other firms. Apple for example would greatly benefit from such a move. It’s OSX is on a model that is incrementally updating. There have been no major changes and they could earn a lot more offering a subscription model.

Apple could increase their margins with a US$14.99 subscription for OSX

Apple could increase their margins with a US$14.99 subscription for OSX

Google has already done so for all its web applications but could extend a slip streamed portion of updates (security rather than features) for Android. So while handset makers still retain the ability to skin Android, internal updates are free to be pushed at will by Google.

 

Conclusion

Software has not moved into a new model for a long time. Consumers have been adapting to confusing version numbers (especially from Microsoft) and could do without that. On top of that, there are much profits to be gleaned from such.

Whether this model takes off will be first seen in Office 365’s popularity. If it goes smoothly, expect many more firms to join in.



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