Yesterday, ZDNet's Andrew Nusca reported that.
This is big. End-of-an-era big.
For most of the PC era, software was sold as packaged products. Before the internet (and, really, before nearly ubiquitous broadband), PC software (and Mac, too) was sold on disk — first on floppy, then CD, and eventually DVD.
In most cases, you didn't officially "own" the software. The "shrink wrap" agreement said that you were merely granted a license to use the software according to some very long, complex, and often incomprehensible terms, which often included things like the promise to make pancakes for the software maker every weekend for a decade and do laundry every other Wednesday.
Say "monthly fee" and imagine you're a product manager at Adobe or Microsoft. Doesn't it just make your toes curl up and make you breathe faster?
Once broadband came around, many software products that were sold in physical packages were also offered as downloads. Even so, the process was generally the same. You'd install the software, enter a license key, and be granted the right to use the application on one or sometimes two computers.
App stores changed the game a bit, but they still followed the "you buy it once" model. When you bought Angry Birds (OK, that's not a good example, because most of you have bought all the Angry Birds variations, on all their platforms). Let's try again.
When you bought a not-Angry Birds app, you bought it. You'd pay your $1 or $3, and it was yours to use. Sure, if you downloaded a game, you might get suckered into spending $100 on magic crystals, but that was your option (or obsession), not a requirement for continued use.
On the other side of the industry was the burgeoning new business model called software as a service (SaaS). Instead of buying a piece of software, you'd rent it — but you also didn't have to install it. It ran on the web.
Gmail is an SaaS product, a web application. As far back as 2005, I signed up for QuickBooks Online. I was moving my business a thousand miles from New Jersey to Florida, and the one thing I absolutely needed, even while all our office computers were in the moving truck, was our accounting data.
We signed up for QuickBooks Online, and in return for an ever gradually increasing monthly bill, we got access to our books anywhere, and I no longer had to maintain the accounting server. The online version was slower than the installed application version, so our bookkeeper regularly complained, but all I had to do was nod sympathetically. Because Intuit maintained the product, I didn't have to add an action item.
Since then, an entire, huge market of web applications have sprung up, many replacing the C:\Program Files and C:\Program Files (x86) installs we've all come to know and love so well.
Packaged software was being compressed on two sides. Well, actually, three. In addition to the app business and the SaaS business, those individual and small-fry developers that used to be called "shareware" developers simply continued their mode of distribution — which was to distribute their software online. The shareware folks used to limit their software or nag you incessantly, but really they were simply using online distribution — without all the cost of packaging.
So, once again, the big vendors — the Adobes and Microsofts of the world — were being pressured on three fronts. Mobile app stores were dragging down prices to ridiculously low levels, for relatively low-quality software. Small-fry shareware developers were distributing online without packaging cost. And SaaS vendors were selling entire suites of web-based products for a monthly fee.
Ooh. Did you feel that tingle? Say "monthly fee" and imagine you're a product manager at Adobe or Microsoft. Doesn't it just make your toes curl up and make you breathe faster?
Can you imagine? Instead of customers paying once every two or three or four years for a product, and then having to hawk upgrades to keep sales up, and instead of a measurable percentage of deadbeats cracking license generators and pirating the software, selling software as a service would mean a steady, constant, predictable income. Every. Single. Month.
Sure, Google Docs implements a limited word processor and spreadsheet, but for all — all — the power of the Office applications, you need a local processing core and compiled code.
So, what Microsoft did was come out with Office 365. It's basically packaged software, sold as a monthly service. I signed up for it. Read.
For about $30 per month for my wife and I, we got our email and 10 licenses for Office. Since we each use three computers, it was somewhat less expensive than going out and buying individual copies of Office (and I need real PowerPoint for work, I can't use a simple slide-making clone).
But $30 per month is $360 per year, and if Office updates every two years or more (and, to be honest, two new features from PowerPoint 2010 to PowerPoint 2013 isn't really an upgrade), we'll really be spending quite a lot for software we once used to just buy, outright.
In the case of Office 365, the factor you might not know about is that we also get Microsoft's Exchange service, a service that we were already paying $20 per month for from another vendor. So, technically, we got the Office part of the puzzle for an extra $120 per year — not a half-bad deal.
Adobe just announced that it's taking this subscription model one step further. Adobe will no longer (after Creative Suite 6) sell stand-alone software. From now on, it's monthly fee or no software.
Before I go on, I need to make a disclosure. It's been a long time since I've bought Adobe's products. As the editor of Computing Unplugged, Connected Photographer, and host of DIY IT here on ZDNet, Adobe has provided me with copies of Adobe products since the first Creative Suite came out back in 2003 or thereabouts. Adobe was also kind enough to provide me with a subscription to Creative Cloud, so I can evaluate and show you how to get the most out of Adobe products for you here on DIY IT.
Even so, as a small business owner for so long, I can see how this change might be disturbing. While buying the full Master Collection was an expensive purchase, it was something a business owner or designer could do once, and then not buy again until cash flow would allow for it.
Of course, that was a big purchase. Amazon lists CS6 Master Collection for between $2,100 and $2,400, and even the student edition is nearly $1,000. That's not just a car payment. That's a crappy car.
That kind of cash is hard to come up with, where $40 to $50 per month is much easier. I imagine Adobe will tick off some of its more set-in-their-ways customers, but bring in a lot of people who want the full power of Adobe products, but who can't (or don't want to) come up with thousands of dollars.
More interesting, though, is the accounting question. When you bought a software product like Master Collection, you had to depreciate it over years. But if you buy a monthly service like Creative Cloud, you can expense that on a monthly basis.
So, some people will derive a benefit from the software-packages-as-a-service model, and others won't be happy about a new monthly bill.
The thing that's a little interesting and a little disturbing is how all these new monthly bills add up. When you add up the email application, the graphics design suite, the office suite, the cloud storage, the accounting web application, the group video chat application, and the desktop sharing service, each Windows and Mac desktop user will probably find themselves saddled with what amounts to another car payment.
So, here's the question: Do you really need another car payment? Do you like this software-package-as-a-service model (and, remember, most require you to sign up for a year at minimum), or do you wish we'd return to the days when we bought what we bought and vendors stayed out of our wallets until we let them back in?