Wednesday, February 24, 2010

The rise of software rental (aka software as service)

I'm evaluating the combination of Notational Velocity and Simplenote (iPhone) to manage my "notes" [1], including those related to home and work. I'll have more on that in my tech blog when I've got some personal experience, but it's interesting now to look at how software pricing is changing.

For years we've "leased" software, but we've had effectively unlimited licenses. After a vendor reaches their core market (revenue), they have little incentive to continue supporting the product (costs). Few vendors have Microsoft's power to force upgrades [2]. Some very fine software has died of this "natural cause".

On the other hand "cloud" services like SmugMug have a sweet recurring revenue model. They sell their service at a yearly price, and they can be the envy of desktop vendors (SmugMug benefits from a wicked lock-in, but that's another post.)

Over the past few years, however, I've seem more vendors experiment with 1 year licenses. This is an easier sale if there's a server-side dependency. For example, after a 1 year hiatus I again pay about $20 a year for Spanning Sync, primarily so I can sync my OS X Address Book with Google Contacts.

Simplenote is floundering about with pricing, but I gather they've suffered the usual iPhone app fate - initial growth then no revenues. Judging from their recent customer reviews they've been flamed for obscuring their current sales model [3]. As of today the base application is "free", but if you look very closely at their web site you might see mention of the "premium" service. The premium service is $9/year and includes:
  • no ads
  • automatic backup of older notes
  • create notes by email
  • RSS feed
  • Unlimited API Usage (free limit is 2,000 API requests/day)
This seems like a very nice set of services and well worth the price -- especially since Notational Velocity (open source, free) means there's no data lock.

The last is an essential requirement for the new model of subscription software. There can't be any data lock. You have to able to move to alternatives easily, or just walk away and be none the worse off. Both Spanning Sync and Simplenote (with Notational Velocity) meet this test.

I like this new model, as long as it's tied to data freedom. It gives me hope that the sofware I love will stick around for a while.

[1] See below. My current solution (Tooldedo Notes + Appigo Notebook) isn't bad, but I'd like to free my notes from the limitations of proprietary formats and I'd like to find a solution that will enable easier integration with Outlook/Exchange note-type functions.
[2] Corporate customers pay for the latest version of Office even if they choose to deploy older versions.

[3] Their pricing model seems entirely reasonable. So why the heck can't they make it more obvious? I wonder if there's a language problem here ...

Update 2/25/2010: I'm still evaluating Simplenote + Notational Velocity + Simplenote Chrome extension (aka simplenote ecosystem), but that tech blog post isn't ready to publish. It is interesting, however, to note the international background:
It's a creative world. The dominance of the US in software development was always unnatural; that time has passed. US Patent laws will accelerate the migration of software creativity to more rational nations.

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