While the upcoming release of Microsoft® Windows 10 (scheduled for July 29th, 2015) comes with many new and exciting features, one of the most significant changes is in how the software is being sold.
Historically Microsoft has offered their flagship operating system in a perpetual software license model – where software is sold in a one-time purchase. Windows 10 is uprooting that approach as it shifts to a subscription license model, whereby the software is licensed and paid for on a recurring basis.
Venture Beat recently discussed several implications of the change in a recent article, “Windows 10 Will Get Automatic Updates for 10 Years,” including how product updates are impacted by the new model:
“…rather than forcing customers to pay for updates and fixes at specific times throughout the year, Microsoft will push updates as they happen and businesses will pay an annual subscription fee. This will allow Microsoft to issue fixes a lot more quickly when problems arise.”
The shift signals an affirmation of the trend that producers are shifting their business models as cloud technology continues to proliferate, requiring companies to re-think their Software Monetization strategies as a recent Flexera Software report cites.
If you’re not familiar with the differences between perpetual and subscription software license models, the table below offers a brief summary of the differences from our recent blog:
If you’re an application producer considering the shift from perpetual to subscription here are some considerations to keep in mind:
- Culturally prepare for a new revenue recognition process
- Add, don’t flip to subscription license models
- Consider how software updates will be deployed as they’re typically included in a subscription license, as we saw in the quote above.
Interested in staying current on trends like these? Read our blog on Software Monetization!
- Read the industry analyst report “IDC MaturityScape: Subscription Business Model Management”
- Read the white paper “Rethink Your Software Monetization Strategy”