Chad Perrin: SOB

17 May 2007

a sickness in the software industry

Filed under: Geek — apotheon @ 12:07

In a TechRepublic article titled Server ‘roles’ to save companies headaches, not cash, I read that Microsoft will be offering slimmed-down installs of Windows Server 2008. I also read that these slimmed-down versions of the OS will not get you any discounts on the price you pay for server licenses.

I’m reminded of something similar in the food service industry — specifically, Ruby Tuesday. There’s an article in Time Magazine about Big Chain Restaurants’ New Small Portions that discusses how TGI Friday’s and the Cheesecake Factory are offering smaller portion sizes for entrees, with an attendant reduction in price as compared with the full-size portions they offer. In 2004, Ruby Tuesday tried doing that as well, complete with nutritional information printed in the menu — but, like Microsoft, it didn’t cut back on the prices any when it cut back on your return on investment. You would have paid the exact same price for the privilege of being given less of the same food, all in the name of “health”.

Unsurprisingly, Ruby Tuesday’s little plan backfired, and everyone hated the idea. Ruby Tuesday no longer offers those reduced portions with nutritional information in the menu. This is a sign of a fairly healthy industry, even if it’s not exactly a health industry — when someone tries to squeeze extra profit out of you without providing at least the same value for your dollars spent, you’re likely to say “No thanks, I’m going somewhere else.” The software industry, unfortunately, is not so healthy — Microsoft sells you less for the same price, and you think it’s normal, or even some kind of improved value.

From the article at TechRepublic:

Laing said such pricing would also further confuse Microsoft’s product lineup, which already has different pricing options based on the scale of the server. With Windows Server 2003, there are standard, enterprise and data center versions of the main OS, as well as a separate storage server, compute cluster edition and small-business version.

“It’s very hard for everyone to manage if you go by scale and then the specific role they are going to run,” Laing said. “It would be very hard to do.”

I think it’s a sign of how sick Microsoft has made the software industry that statements like this can be made with no irony or humor, in all seriousness, and people just accept it as a reasonable statement. Think about it for a moment:

Microsoft already charges you for your server OS software based on how much use the system will get. If the system gets more use, it needs to be licensed by a more expensive agreement. In other words, the more use you get out of it, the more it costs you.

On the other hand, you do not have to pay specifically for its capabilities. If it is of more limited capabilities, you still pay the same price. This is, according to Laing, because it would be too “confusing” to combine pricing differences for different ranges of capability with pricing differences for how much you use it.

When you buy a chainsaw, you pay for it based on its capabilities — not based on how many trees you’ll cut down. When you buy a car, you pay for it based on its performance, efficiency, and safety characteristics — not how many miles you’re going to drive it. When you buy a laptop, you pay for it based on its performance and resource specs, peripherals, and physical characteristics (keyboard, screen size, weight, et cetera), not based on whether you use your laptop all day for work, how many hours of World of Warcraft you’re going to play on it per week, or whether you’re planning to loan it to family members now and then. When you buy a meal at TGI Friday’s, you expect to pay a lower price for smaller portions — you’re paying for the quantity of food you get, all else being equal, not for how much of it you actually eat.

Software, however, is different — and Microsoft made it that way. Yeah, the software market is pretty damned sick, and Microsoft is spreading the plague.

5 Comments

  1. Hmm… for the same price per mile, would I rather drive a Ford Focus or a Bugatti Veyron?

    Comment by Sterling Camden — 17 May 2007 @ 04:14

  2. I think that you may misunderstand Microsoft pricing, based on some of the things you say here. Microsoft server pricing is based upon two factors: the level of the server software (Storage, Web, Standard, Enterprise, Storage, Small Business Server, etc.). This pricing determines the system capabilities, which is exactly what you feel they should charge for, if I read this right. The other angle of the pricing is the Client Access Licenses, which limit the number of users that can be connected to it at any given time (note that IIS is not restricted by this, and Exchange uses its own CAL’s, so a mail server does not need a Windows CAL and an Exchange CAL for each email user, they only need an Exchange CAL).

    So while you seem to understand the per-user fee, I think when you state:

    “On the other hand, you do not have to pay specifically for its capabilities. If it is of more limited capabilities, you still pay the same price. This is, according to Laing, because it would be too “confusing” to combine pricing differences for different ranges of capability with pricing differences for how much you use it.”

    that you may not have a 100% understanding of Microsoft licensing.

    Personally, I really do not like the Microsoft licensing anyways. I think the “Software Assurance” thing is rediculous, particularly when you buy it right after a new version comes out, you end up paying a lot more than the perpetual license would have been. I also think that they should either charge for the software or the CALs, but not both. Microsoft’s pricing model is (as far as I can tell) in line with the “enterprise class” market, but it is still a bummer.

    What I find really amazing is just how much some of Microsoft’s “open source” competitors charge. RHEL and SLES are both more expensive than Windows Server for the base product; I ahve been comparing “collaboration suite” offerings lately, and both Scalix and Zimbra turn out to be much more expensive than Windows + Exchange, once you pay for a level of software that comes as close as possible to matching Exchange’s functionality (for basic levels they are free or cheaper, but I would rather just use qmail on FreeBSD anyways, which won’t require a SLES or RHEL license).

    J.Ja

    Comment by Justin James — 17 May 2007 @ 06:48

  3. Justin, go read the article I linked, and what I meant should become crystal clear.

    Comment by apotheon — 18 May 2007 @ 12:27

  4. I gotcha now… the quote without context, plus the line I quoted got me all confused… I’ve been running on ~5 hours sleep per night for the last month or so. On top of that, JMJ 2.0 (Jarrett Marshall James) is currently released to manufacturing in the next 2 – 3 weeks, and should be shipping at any moment. I’ve been running around like a headless chicken between 12+ hour work days, getting car seats installed, giving bottles their first cleaning, washing clothing to get it ready, and giving the “Development/QA Team” back rubs constantly to get the source code ready for its final unit test, so-to-speak. I know, it is rather bizarre of me to think of my first baby in terms of a software project. Maybe I should make a process workflow too. My friends are taking bets to see if his first words will be “midnight code move”, “production is down!”, or “just use Perl for that”…

    I digress, due to exhaustion. Sorry.

    But yes, it makes much more sense now.

    J.Ja

    Comment by Justin James — 18 May 2007 @ 09:44

  5. No problem. I figured it was something like that — I get the impression from your TR blogging activities that you’re feeling pretty hectic and run down lately, so I figured I’d just point you in the right direction to see whence I came with my statements. I have confidence you can get up to speed when the right materials are set out in front of you.

    Anyway, thanks for bearing with it.

    Comment by apotheon — 19 May 2007 @ 02:08

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