Professor Geek

Here is an interesting blog post by Serguei Beloussiv wherein he states the obvious: Virtualization might be the straw that breaks software licensing’s back. It gave me a lot of food for thought. Let me explain. Since the inception of the software industry shortly after the PC revolution began, licensing has typically been permission to install the software on a single machine. There are several factors currently working against that as a business model:

1. Most basic features (the ones that the vast majority of users need) don’t improve when software is upgraded. Instead, additional, high-end, features are added. The more mature a package becomes, the less significant the changes from one version to another. Since software companies rely on you upgrading periodically, the maturing of software means less revenue for them.
2. Many software companies are now looking at that revenue stream differently and are beginning to charge for “support” and “maintenance.” Some are even changing the model and charging annual fees for the software instead of allowing a license with an infinite time frame attached to it. In actuality, that isn’t a new model. In the days before PCs, most software (IBM was the big vendor … if you had one of their mainframes you pretty much had to get the software for it from them) was licensed annually and included support. There was no model like the one that came about with PCs (one-time licensing fee, good forever). The result of this changing model is that software prices are rising. Vendors are looking at maintenance as a way to keep the cash flowing so that they can invest in further development.
3. Virtualization has come along, particularly in the server arena. If you are using a software license that is aimed at a single machine, but you can now have 10 or 11 virtual machines running on that single physical machine, does that mean you can install that software on every one of those virtual machines? Probably. That’s one reason why the licensing models are changing. Soon you will see that the license doesn’t refer to a physical machine, but a virtual machine. If you want to run 10 virtual machines, all with different configurations of Windows 2003 Server, you will need 10 licenses instead of one.

How are customers going to react to all this? Will people keep paying these rising prices while not getting any appreciable value added? Will open-source become a much more viable alternative for software? Only time will tell, but it’s something to keep our eye on.

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