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Software subscriptions: #progressive or #premature?

ChangeLast year, Adobe became a pioneer in offering software subscriptions by unveiling Creative Cloud, their subscription-only software service.  Yesterday, they took the next step by announcing plans to discontinue development of their Creative Suite or other CS products. Focusing all future effort on Creative Cloud, Adobe will no longer offer its classic, packaged software product in this category.

Industry reaction is mixed. Some pundits point to this as the future, others explore challenges, and a few wonder if Office is next.

Like Adobe, we think subscription software-as-a-service is the future. The benefits to consumers are huge. Subscribers are always up-to-date. They get the latest and most complete applications.  They can use subscriptions across the multitude of devices people use today. Web services like SkyDrive and applications like Skype are also more easily integrated with subscription services, like the new Office 365 Home Premium.

However, unlike Adobe, we think people’s shift from packaged software to subscription services will take time. Within a decade, we think everyone will choose to subscribe because the benefits are undeniable. In the meantime, we are committed to offering choice–premier software sold as a package and powerful services sold as a subscription. 

As proof of this point, since the launch of Office 365 Home Premium and Office 365 University in January, more than a quarter of consumers buying Office have chosen the subscription. This exceeded our expectations, given that software subscriptions are relatively new to most consumers. So, perhaps the shift is happening faster than we originally thought, and Adobe is helping blaze the trail. Tell us @Office or in the comments what you think.  Software subscriptions: #progressive or #premature?

–Clint Patterson

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18 comments
  1. Well, apparently, you do not REALLY want opinions as my comment was not added. This one probably will not be added as well. We’ll see. Most ordinary everyday people with even half a brain will never never allow themselves to be robbed yearly for software they used to be able to outright own. How’s that? Corporations may find it useful. but everyday people have enough
    to worry about just feeding their families in these economic times, much less re-paying for software every year like paying taxes.

  2. What paulej said:

    "I also don’t like subscriptions because there are times when I just don’t want to get new versions of the software. That might be due to the fact I don’t want to continue using a particular product any longer or it might be due to the fact that my budget is a bit tight. When buying software, I can upgrade on my own schedule and I can manage my expenses."

    Cost of ownership is far lower for me buying Office, rather than subscribing.

    So long as that remains so, I will continue to buy. Unless, of course, Microsoft decides to pull the rug from under own feet within the next decade by dropping the option to purchase. When that happens, I’ll probably stick with what I’ve got or look for alternatives that continue to give me a low cost of ownership.

  3. I believe what Microsoft did with Office 365 Home Premium was the right way to do it. 5-user license for the Office suite, extra SkyDrive storage and monthly Skype minutes for $99 a year is a good deal. Adobe’s pricing, however, is WAY beyond that, with the cheapest plan being $19.95 pr MONTH for single app access. As a non-professional family user I can justify the Office 365 price tag, but there is NO way I can justify Adobe’s.

  4. There are likely many who signed up for a subscription since the home user offering is relatively cheap. I doubt a lot of businesses signed up. Also, the Office Pro version (which is what I always bought) is a little hard to find — seriously. Worse, the EULA disallowed transfer of the license from one machine to another. This was supposedly changed, but the published EULA I saw at the end of April still said transfers are not possible.

    I don’t like subscriptions, because they’re a hassle. I have about a dozen applications I use regularly. If I had to pay a subscription for each one of them, it would drive me crazy. And every time my credit card expired, I’d have to rush around to update the information or risk getting locked out of my software.

    I also don’t like subscriptions because there are times when I just don’t want to get new versions of the software. That might be due to the fact I don’t want to continue using a particular product any longer or it might be due to the fact that my budget is a bit tight. When buying software, I can upgrade on my own schedule and I can manage my expenses.

    Software subscriptions are like car leases or renting an apartment. You pay money, but you never own anything. In general, they are a waste of money for the consumer. It’s great for business, so I can understand by Adobe and MS like it. Don’t count me in, though. I’d rather buy my software.

    • @paulej, thanks for your thoughts. I wanted to clarify a few points raised in your reply.

      The EULA has been updated, but the text in the app won’t reflect the latest updates for some time. For the latest, see the post on this blog regarding transferability. http://blogs.office.com/b/office-news/archive/2013/03/06/office-2013-retail-license-agreement-now-transferable.aspx

      You are never "locked out." If your credit card expires, at the next auto-renewal (if you’ve opted for auto-renewal), you’ll get a notice. If you don’t fix it over several weeks, the apps will eventually go into read only / print mode, but you can always access and use your docs with those apps or the free Office Web Apps, which we’re always improving.

      More broadly, you raise an interesting point about car leases and renting. Those are relatable analogies, but the difference is that the car or apartment don’t get any better when I lease or rent. They are purely a different way of buying. With software, the subscription unlocks new capabilities. It’s like a car that fills itself up with gas or an apartment that cleans itself (ok, maybe not the best analogies, but you get the gist).

      Whether you want those new capabilities (which was also part of your point), is another question. We’ll have more to share on that front in the future, so I hope we can eventually turn you (and a lot of other folks who share your thoughts) around on that viewpoint.

      • Come on Clint, really? You are going to compare home & auto leasing to software leasing. Most , if not all users don’t want a constant barrage of new features. I decide what I want it to do, then I go and buy what does the job at the least cost. At this point I should be happy, but we all know I’m not. I have to keep getting updates from Microsoft, since the software is so buggy with security leaks and what have you. But after a while, those updates have made my package pretty stable, at least enough so that I decide I want to stay with it. But in leasing, I get upgraded monthly, which means I will need updates on a daily basis, just to keep it running.

        With a lease, the software is upgraded even if I don’t want it. I already have what I need, I don’t want it to change or for it to be upgraded. With leasing, I quit paying, then I can view and print my documents. No editing or creation of new documents. Now I can buy, and stay with that package. That is until Microsoft decides it needs more money and makes my package no longer compatible.

        I will go as long as I can without upgrading. When MS forces us to sign into the leasing package, I’ll be using freeware. I’m already doing so with some packages right now. Been buying the Office Pro now for I can’t remember how long. Have 2010 now, and that will probably be my last purchase of an Office product. There is no way I’m signing into getting my gas tank filled automatically. I’ll be signing up for the greenware, or as we call it, free/shareware. Not my choice Microsoft, it’s your’s.

  5. Wow, I just wish Adobe could come and listen to these great comments. Way to go Office!

  6. Software isn’t cable tv. I have no desire to put myself in a position where I have to pay money each month to use my word processor, spreadsheet, or photo editor.

  7. I absolutely will not subscribe to software. Services such as photo storage, sure, as it’s similar in the non-virtual world to renting storage space. But I will not "lease" Photoshop, Office Software, or Accounting Software (Intuit is rumored to be thinking of the subscription model for Quickbooks). When a company does what Adobe did, they are pretty much saying, "subscribe… or else", and I’m sorry, but being put against the wall like that does NOT sit will with me (or my wallet).

    I’ve been an Adobe user for many years, but CS5 was my last purchase from them. I’ll be most likely switching to Corel’s Paint Shop Pro package, or if something even better comes along, that. Adobe execs may not care – they get their multimillion dollar bonus checks regardless of what I do this year. So be it. But over time as more people like myself leave as customers, those bonus checks do get smaller. And by then the trust is destroyed forever and it’s nearly impossible to get the customer back.

  8. "Subscribers are always up-to-date…"

    I will NEVER pay for a subscription just to get patches from the programmers to correct their misstakes. I don’t want to be forced to pay a subscription in case I decide that I’m happy with the version I have and don’t want to upgrade. I want to be able to edit my own documents, even if I don’t want to upgrade. A subscription will definitelly stop me from doing that as soon as I stop paying.

    If I want new features, I buy the next mayor version.

    As many here have pointed out, software is NOT content nor storage so this price modeling is not OK.

  9. Subscriptions just take us ransom. People who didn’t want to pay through their noses for every new software-release and each silly new feature are screwed now. They can no longer buy what they need when they want to. So, once again customers lose and Big Brother laughs his head off. Way to go Adobe.

  10. For many users, subscriptions are neither progressive nor premature, they’re #wrong! They’re great for developers since they result in a guaranteed income stream. For many users, they’re terrible. They result in monthly fees regardless of how much usage a user gets; they result in upgrades not at the user’s discretion; when the subscription lapses, the user is left without runnable software, while sometimes an older version of software is just fine; without runnable software, the user may be unable to access his own files, since they’re in proprietary formats; the list goes on and on.

    • Oh, and once you’ve hooked enough people, there’s an incentive to keep raising the subscription fees. And there’s no incentive to develop quality enhancements, since the income stream is guaranteed regardless of the nature and number of improvements.

  11. I will not subscribe. As everyone state’s here, the cost factors are just guaranteed income for the developers. I used MS Office 2003 as long I could. Was forced to upgrade when Microsoft quit supporting, and upgraded to the newest version, at the time 2010.

    The subscriptions will upgrade you to the newest version, even if you are happy with the one you have. You will be forced to do the work that you are paying for. In other words, you will debug the software for Microsoft, while you pay for it. We do this now, except after a while the patches finally give you a stable version that you can use. With the subscription service, you get that working version, then they hit you with a so called upgrade and down the tubes it goes.

    The developers are loving this new retail model for it’s guaranteed income stream. As I read from other post’s, we will see less innovation, more bugs and less of our money. That is guaranteed, so why would I want to pay a monthly service for such so-called benefits?

  12. I’m sorry for this additional post, but I forgot a few minor points. After re-reading some of the post’s here, I felt I should point out a few things that a few people don’t realize.

    First off, when you are at the local office supply store and you feel like your are buying Office or Adobe products, I hate to inform you but you aren’t. if you go over the software user agreement, you will find that you are not the owner of said software. By paying the big bucks, you are given the right to use it. Therefore, if Microsoft decides to do an upgrade, or change features, you really have no choice but not to upgrade for now. But you endanger everyone else when you don’t upgrade. Security updates help protect everyone by keeping the infection from getting a foothold in the community. Those that don’t do the upgrade allow the virus to spread, and in some cases, mutate.

    My second point is that once the subscription service begins, you will not be able to keep your older version very long. The support for it will be gone, and they will make changes so that your version is not compatible with the newer software. Therefore, if you wanted to interface with the outside world, forget it. Do you think Microsoft would allow you to keep using an older version when they can force you into the better, faster, quicker version? Any one notice, that over the years computers keep getting faster, but Microsoft at best keeps pace.

  13. "we think people’s shift from packaged software to subscription services will take time."

    Yahoo!
    You chaps are just getting better and better in the eyes of the salt o’ the earth!

    Microsoft once had the appearance of the crusty monarch, now good wisdom and solid proof that MS understands the hearts of their end users is getting out.

    It WILL take a while for us to catch up with the future that’s been prophesied. I remember years ago Mr Gates said the tablet was going to be the way of the future, it seemed far fetched.
    Thanks guys!

  14. I think Star Trek did it before Gates mentioned it. That is the use of tablets. Star Trek has been using them for a while, and Bill Gates saw this a talked about it. In my opinion, when the State Department found Microsoft guilty of business practices, they should of put him in prison instead of the measly fine they handed him. His monopolistic business practices stymied computer technology and destroyed many a software company. Anyone remember Netscape?

    The state dept. had emails from Mr Gates, where he told certain companies, Compaq being one, that if they produced the products they were working on they wouldn’t get access to Windows or DOS. Since all involved had businesses that were built around that software, they had no choice but to shelf those products. Those products were faster computers with more capabilities like voice control. Here we are like 20 some years later, and still no voice control in any real sense of the word. Thanks to Gates, we are still typing away. Thanks to Google, we are finally seeing voice control work. Thanks Google.

  15. i just wanted to add a couple of additional thoughts here.

    1) i think a bunch of folk are assuming that subscription means "in the Cloud only" which i am certainly not expecting. with the current subscription models you can still install locally, and i would not expect this to go away anytime soon.

    2) subscription is a great commercial model for both vendors (Microsoft) and consumers (the rest of us) we pay for what we use (i don’t buy 1,000,000 gallons of gas store it and then hope to use it, i pay for what i need/use) and yes, we can take a sceptic view about paying for "bug fixes" etc. but alongside fixes we get improvements, they’re hand in hand and always have been. it’s the nature of software.

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