How sticky are you?

On January 2, 2008, in news, by

So it’s been a day since the blog post about the new licensing model and I can say that I honestly have mixed feelings about it.

On the one hand if you are a firm that looks at technology in a “copier” kind of view, the lease model has some interesting points to it.  I see this being a dot com sort of offering.  Lesser money in, and in three years or less, I’m getting the latest and greatest on the next leased equipment I lease.  So I think it has it’s place.

Another good thing about this offering is that I think we now have all license models now being international, so that we can at least on an international list all talk the same licensing language.

But the bigger question to me is still the whole issue of price point.  The reality for a small firm is that we buy operating systems with hardware.  On one of the lists today someone was asking since Vista sucked (not the exact words but you get the drift), was there movement to Mac or Linux because you can get alternative versions of the software now on Mac and Linux.  But the problem is the “sticky” problem.  If one lived with only each application to worry about, we could move platforms.  But the reality is we don’t.  Quickbooks for Mac doesn’t have the same plug ins and functionality as Windows.  Quickbooks for Ubuntu…. doesn’t exist.  Yeah yeah you can say, but Susan, use WINE, but the reality is that the average human bookeeper out there is probably still waxing poetic about that old Dos version and would be happy still on it.

The trick for the small business owner, the small business technology provider is to not underestimate the power of the “sticky”.  Don’t let anyone fool you… migrations suck and impact productivity.  So even if you say “oh let’s move to Software as a service online where the platform doesn’t matter” don’t say that too fast until you check out the platform.  Does it only support ActiveX if so you are still a Windows world.  Has it been built to work well on IE and only passing on Firefox?

Bottom line check out your ‘stickiness’ before you think it’s easy to migrate.  Chances are, at this time, you are stickier than you think.  But even with that said.. Microsoft is competing these days against free software.  Open Office.  Google applications.  The list of free or nearly free software one can put together and come close to a Office suite is getting very interesting for Microsoft these days.  But it still comes down to the productivity impact on how ‘sticky’ you are.  And if you are still a traditional firm like me, we’re still pretty sticky.

Will subscription licensing have a place?  Yes I think it does.  But I’m still seeing that the OEM price tag is still hard to argue against.


3 Responses to How sticky are you?

  1. Hi Susan,

    Living in the land of licensing now I understand completely where you are coming from. In the small business arena OEM is a clear winner at the moment but in the last few months we have seen a steady positive growth in the volume licensing space.

    It seems the way many Partners license their customers is reflected in the way conduct their business. For example, one Partner in Ireland ONLY sells his SBS via Open licensing and they can do this because of the types of customers they have and how they talk about IT as a part of the overall business strategy. For many of us OEM, and particularly on desktop and server OS’, is the easiest way to gain business from new and existing clients.

    The easiest way to start with volume licensing is in the application space such as Office. There are a number of benefits to open licensing which needs to be understood fully even before a Partner attempts to sell it. It’s not always easy either and because of the time you have to invest to understand it and the opportunity, it isn’t necessarily for every Partner or indeed every client.

    You’re right with regards to the issue of price point as well. I’m always interested to find out how licensing is sold to a customer – if a customer is price sensitive and not willing to see IT as an investment but a necessary evil, then the discussion of volume licensing is going to be a tough one. Richard Tubb illustrates how far clients can go in a recent post of his (!BDC5D8CC9BEA292B!1284.entry).

    I would suggest for anyone considering volume licensing and how to overcome client objections it’s important to start understanding it now even if their customer base isn’t ready. Typically, clients on volume licensing are the upper end of ‘small’ and wanting to grow into the ‘medium’ space and although many customers may not be at that stage now, it may be something that you can help to start incorporating into their business plan for the future.

    The benefits of licensing to anyone are very attractive until the price tag is hung onto it at the end of the proposal. The trick is to do what we’ve all done when selling in a network and/or upgrade – you show the benefits and soft cost savings. If you believe that volume licensing has it’s place with some of your clients then now is the time to start understanding it yourself. After all, how can you sell what you don’t know?


  2. Mark says:

    We’ve had OVSL here in the UK for several years now… we operate exclusively in the SMB space and have pushed this licensing model heavily in the last 12-18 months in particular.

    It has both pro’s and con’s (What doesnt)…

    From a pro perspective it enables clients to budget, to plan and manage costs more effectively, to avoid the 3 yearly capital expenditure ‘bump’. It enables you as the outsourced IT dept to use deploy the latest software to your client using Volumn Licenses and all the nice tools that go with that.

    From a ‘con’ perspective… it is expensive I think.. given the potential long term buy in of this model it is appalling that Microsoft give you virtually no discount vs other llicensing models. The renewals process whilst generous (you can buy 10 core cals and add 10 PC’s a week later but not pay for them until next year) is onerous. And finally the backend distributor support for this model is still weak.

    Overall we personally like it, I discuss it with every new client, and I would think that 80% end up using it. I just wish MS would be more realistic in pitching it.

  3. indy says:

    The reason we are avoiding subscription is multifaceted:

    1. We don’t know the market 3 years from now. We cannot predict our needs technology wise in three years.
    2. Microsoft may not fit our needs 3 years from now. Vendor x may not.
    3. The latest and greatest for Server and Client operating systems is a bad idea. No MS OS is worthwhile in a business setting pre SP1 unless you enjoy pain. Heck even Shadow Copies didn’t work “right” until 2003 SP2! That was a major feature!
    4. Operating systems are lasting much much longer than before. We don’t plan on moving away from XP until support ends or Vista is on SP2, if that. We initially liked many of the advertised features of Vista, but when we tested it we quickly saw it was not going to fit when coming from rock solid stable XP. I’m not saying we’re looking for alternatives at this time, but there is no rush to Vista AT ALL.