The Software Industry
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In the past (and even now), there was/is an annual maintenance contract with the software vendor that paid for upgrades and bug fixes. It is like buying an extended warranty for your car. My question remains: what justifies per-user pricing? PS. I brought in Oracle as an example of egregious business practices that is enabled by per-user pricing.
Vivi Chellappa wrote:
what justifies per-user pricing?
If a school purchases text books, they need to pay for each copy that they buy, even though the content of each book is the same. What's the difference with software?
The difficult we do right away... ...the impossible takes slightly longer.
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Software is a product. Much like TV, automobile, washing machine, etc. The latter are tangible while software is intangible but that is not an important difference. Once upon a time, when you bought a software, you paid one price for it, no matter how many persons in the purchaser company used it. Then they decided to charge according to the power of the processor the purchaser company used. This is like saying you have a larger living room and so the TV is higher priced. Then they decided to charge price/user. This is akin to the price of the TV or washing machine being dependent on how many persons are in the household. Now, Oracle has gone one step further and its Java licenses are based on the number of employees in the purchaser company, including janitors or messenger boys they may employ. If a customer refuses to accept the new terms, which yield hundreds of thousands if not millions of dollars more in revenue to Oracle, Oracle is threatening an audit of those companies to determine if any of the contractual terms are violated by the purchaser. Companies have sprung up to assist the purchasers in questioning the findings of these audits. What makes software different from common household goods such as TV, automobiles, etc? What justifies differential pricing based on number of users? Other than the greed of software vendors.
Vivi Chellappa wrote:
What makes software different from common household goods such as TV, automobiles, etc?
I'd say you're not giving enough weight to the distinction between tangibles and intangibles. Tangibles have limited lifetimes; automobiles, TVs, microwave ovens, smart phones, groceries, etc., eventually need replacing, often because some folks like to have the latest 'thing'. There's an on-going market for new widgets. The sales model for tangibles is not sustainable for software over time. Once most people who need a particular software app have it, it gets harder to sell them upgrades especially as the product matures, and the market for new purchases is never as big as the initial sales. I don't know that this justifies the model nearly every software company has adopted over the last decade, but I'm pretty sure that's the reason behind it.
What justifies differential pricing based on number of users?
If you're buying wine for an evening, are you buying one bottle for you and your partner, or for a party of 50? You gots mo' people, you needs mo' wine. That's where the gap between tangibles and intangibles is negligible.
There are no solutions, only trade-offs.
- Thomas SowellA day can really slip by when you're deliberately avoiding what you're supposed to do.
- Calvin (Bill Watterson, Calvin & Hobbes) -
Thankfully it only applies to Oracle OpenJDK, which is essentially Standard Edition. I'd be surprised if any large companies continue to use it, at my last place I had a migration task to move all JDK installations from SE to the Adoptium OpenJDK versions. Took me all of about a day and probably saved the company a lot of money since the company was international and had a lot of employees. I suppose the only companies interested would be those specifically wanting the Oracle support, but is it worth the cost? I don't think so. Some other platforms do similar things where they charge different models based on the size of your business, either by the number of employees or the average annual revenue.
Chris Copeland wrote:
charge different models based on the size of your business, either by the number of employees
See, if it's a site license, charging by the number of employees makes some sense to me. Otherwise, it's just gouging.
Check out my IoT graphics library here: https://honeythecodewitch.com/gfx And my IoT UI/User Experience library here: https://honeythecodewitch.com/uix
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Software is a product. Much like TV, automobile, washing machine, etc. The latter are tangible while software is intangible but that is not an important difference. Once upon a time, when you bought a software, you paid one price for it, no matter how many persons in the purchaser company used it. Then they decided to charge according to the power of the processor the purchaser company used. This is like saying you have a larger living room and so the TV is higher priced. Then they decided to charge price/user. This is akin to the price of the TV or washing machine being dependent on how many persons are in the household. Now, Oracle has gone one step further and its Java licenses are based on the number of employees in the purchaser company, including janitors or messenger boys they may employ. If a customer refuses to accept the new terms, which yield hundreds of thousands if not millions of dollars more in revenue to Oracle, Oracle is threatening an audit of those companies to determine if any of the contractual terms are violated by the purchaser. Companies have sprung up to assist the purchasers in questioning the findings of these audits. What makes software different from common household goods such as TV, automobiles, etc? What justifies differential pricing based on number of users? Other than the greed of software vendors.
The biggest difference between Products (TV, Automobile, Washing Machine) and software is that software is not sold. Software is licensed. You do not own it. You own the right to use it under the terms of the licensing agreement. If you do not agree with the terms of the license you are free to negotiate with the software owner or go find a different software solution with licensing terms that are more to your liking (like open source alternatives). The problem that software owners/vendors have is that software is easy to install and run on most computing equipment. Need an extra word processor for a new employee, just install the one you have on that employee's new PC. That is why most software installs try to phone home to the mother company to validate that the software license for it is not already bound to a different PC. Need more flexibility in the international nature of your multi country corporation. Then get an Enterprise License and you are free to use software as much as you want. Of course, you are going to pay an order of magnitude more for the license than a single user license. Have a small office with a tiny server and you don't want to pay for "big iron" prices. Then there are small server (per core) pricing. You can compare hard good products with software products only when they can "pop into existence" by simply installing a copy of them in another location. Need a 2nd TV, just install a copy of your TV in the new room, or friend's house. But I do agree that Oracle is the example of hardnosed licensing. It's the reason why almost everyone that is doing any serious development with Java software products is using OpenJDK development. If you are an enterprise and using Oracle as a database then you are stuck. You are already paying an arm and leg for licensing and support.
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Software is a product. Much like TV, automobile, washing machine, etc. The latter are tangible while software is intangible but that is not an important difference. Once upon a time, when you bought a software, you paid one price for it, no matter how many persons in the purchaser company used it. Then they decided to charge according to the power of the processor the purchaser company used. This is like saying you have a larger living room and so the TV is higher priced. Then they decided to charge price/user. This is akin to the price of the TV or washing machine being dependent on how many persons are in the household. Now, Oracle has gone one step further and its Java licenses are based on the number of employees in the purchaser company, including janitors or messenger boys they may employ. If a customer refuses to accept the new terms, which yield hundreds of thousands if not millions of dollars more in revenue to Oracle, Oracle is threatening an audit of those companies to determine if any of the contractual terms are violated by the purchaser. Companies have sprung up to assist the purchasers in questioning the findings of these audits. What makes software different from common household goods such as TV, automobiles, etc? What justifies differential pricing based on number of users? Other than the greed of software vendors.
A few decades ago, I would agree with you. But if you, we, us read the fine print, we don't own the s/w any more. It's not a tangible item, but wait, more to follow. What Oracle is doing is not new. They tried this crap 20 years ago and promptly got deleted from our system. I was in the office when my VP looked at the Oracle rep, looked at me, told me spin up mysql or postgres, up to you, looked back at the oracle rep, told him, you're fired, get the f'k out of the building. That said, Oracle or any company or YOU are entitled to demand whatever they want. You don't have to buy it. But you are dealing at the corporate level, so Oracle is counting on the fact that the pain of moving from their product is worse than paying their new charges. Broadcomm bought VMWare and it's a cluster fluck. Oracle is doing nothing wrong. Might piss you off, anger you, but their product is their product. Want to really get upset? Look t the cost of a bottle of Coke. It's $18/gallon. Don't even get me started on "bottled" water.
Charlie Gilley “They who can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety.” BF, 1759 Has never been more appropriate.
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Vivi Chellappa wrote:
What justifies differential pricing based on number of users?
I don't agree with differential pricing when it comes to greed. But, I think scaling pricing is great if it's done ethically. It gives smaller companies a chance to play ball. But, only if done ethically and not out of greed. Dunno about this situation in particular. I will say though that greed based pricing differences have been around for a while now. Hotels, Airlines, etc. will charge you more if you buy a ticket from an affluent area, for instance. So, the greed part is nothing new it's just being expressed through software now that the tech giants have fully embraced the dark side.
Jeremy Falcon
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Software is a product. Much like TV, automobile, washing machine, etc. The latter are tangible while software is intangible but that is not an important difference. Once upon a time, when you bought a software, you paid one price for it, no matter how many persons in the purchaser company used it. Then they decided to charge according to the power of the processor the purchaser company used. This is like saying you have a larger living room and so the TV is higher priced. Then they decided to charge price/user. This is akin to the price of the TV or washing machine being dependent on how many persons are in the household. Now, Oracle has gone one step further and its Java licenses are based on the number of employees in the purchaser company, including janitors or messenger boys they may employ. If a customer refuses to accept the new terms, which yield hundreds of thousands if not millions of dollars more in revenue to Oracle, Oracle is threatening an audit of those companies to determine if any of the contractual terms are violated by the purchaser. Companies have sprung up to assist the purchasers in questioning the findings of these audits. What makes software different from common household goods such as TV, automobiles, etc? What justifies differential pricing based on number of users? Other than the greed of software vendors.
Vivi Chellappa wrote:
What makes software different from common household goods such as TV, automobiles, etc?
Nothing, the rest of those industries just hasn't caught up yet. If you read about about The Great Reset, or whatever it's called, one of the key components is that nobody owns anything -- they rent stuff. :omg: "You'll own nothing and you'll be happy" - World Economic Forum, 2016.[^]
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A Lightweight Thread Safe In-Memory Keyed Generic Cache Collection Service A Dynamic Where Implementation for Entity Framework -
Kschuler wrote:
when you bought software, you installed it and it never changed after that point.
Well in over 50 years in this industry I never worked on any software like that. The frequency of updates may not have been as often as now, but it still happened quite regularly.
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In the past (and even now), there was/is an annual maintenance contract with the software vendor that paid for upgrades and bug fixes. It is like buying an extended warranty for your car. My question remains: what justifies per-user pricing? PS. I brought in Oracle as an example of egregious business practices that is enabled by per-user pricing.
I don't agree with the per employee of your company bit...but per user of the software seems like a good way to account for the constant upkeep of the software. What else would be a fair way to do it? If I want to use some software for my small business of 4 people, I should have to pay the same as a huge corporation of thousands? Per user is at least proportional.
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Vivi Chellappa wrote:
What makes software different from common household goods such as TV, automobiles, etc?
Nothing, the rest of those industries just hasn't caught up yet. If you read about about The Great Reset, or whatever it's called, one of the key components is that nobody owns anything -- they rent stuff. :omg: "You'll own nothing and you'll be happy" - World Economic Forum, 2016.[^]
Latest Articles:
A Lightweight Thread Safe In-Memory Keyed Generic Cache Collection Service A Dynamic Where Implementation for Entity FrameworkMarc Clifton wrote:
"You'll own nothing and you'll be happy" - World Economic Forum, 2016.[^]
Much better stated as, "You'll own nothing and like it.
The difficult we do right away... ...the impossible takes slightly longer.
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Software is a product. Much like TV, automobile, washing machine, etc. The latter are tangible while software is intangible but that is not an important difference. Once upon a time, when you bought a software, you paid one price for it, no matter how many persons in the purchaser company used it. Then they decided to charge according to the power of the processor the purchaser company used. This is like saying you have a larger living room and so the TV is higher priced. Then they decided to charge price/user. This is akin to the price of the TV or washing machine being dependent on how many persons are in the household. Now, Oracle has gone one step further and its Java licenses are based on the number of employees in the purchaser company, including janitors or messenger boys they may employ. If a customer refuses to accept the new terms, which yield hundreds of thousands if not millions of dollars more in revenue to Oracle, Oracle is threatening an audit of those companies to determine if any of the contractual terms are violated by the purchaser. Companies have sprung up to assist the purchasers in questioning the findings of these audits. What makes software different from common household goods such as TV, automobiles, etc? What justifies differential pricing based on number of users? Other than the greed of software vendors.
Vivi Chellappa wrote:
Once upon a time, when you bought a software, you paid one price for it, no matter how many persons in the purchaser company used it.
I don't agree with that premise, but let's keep going to see where that sort of thinking leads...
Vivi Chellappa wrote:
What justifies differential pricing based on number of users?
Scale. You sell one license for your software to Company A that is going to have 3 of its employees use your software. Then you sell one license for your software to Company B that is going to have 1000 of its employees use your software. Company B should pay the same price as Company A? The only thing that's fair in that market is for you (as a software vendor) to have a single opportunity to sell one license (one per company), because every company in the world can get away with purchasing a single license? Consider also that Company B will use so much more of your support than Company A that it'll completely eat whatever profit you made on the sale, and soon having that company as a customer will cost you money. Unless you charge a fortune for each license, which means you'll never have any opportunity to sell to Company A to start with. The TV/automobile analogy severely falls apart because when you sell those, you charge for every TV/automobile you sell. The customer has a need for more of his people to use a car? Sell him more cars. I'm never going to defend Oracle for its licensing practices, but that's because they deviate from the sort of common sense (I hope) I've described above.
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Software is a product. Much like TV, automobile, washing machine, etc. The latter are tangible while software is intangible but that is not an important difference. Once upon a time, when you bought a software, you paid one price for it, no matter how many persons in the purchaser company used it. Then they decided to charge according to the power of the processor the purchaser company used. This is like saying you have a larger living room and so the TV is higher priced. Then they decided to charge price/user. This is akin to the price of the TV or washing machine being dependent on how many persons are in the household. Now, Oracle has gone one step further and its Java licenses are based on the number of employees in the purchaser company, including janitors or messenger boys they may employ. If a customer refuses to accept the new terms, which yield hundreds of thousands if not millions of dollars more in revenue to Oracle, Oracle is threatening an audit of those companies to determine if any of the contractual terms are violated by the purchaser. Companies have sprung up to assist the purchasers in questioning the findings of these audits. What makes software different from common household goods such as TV, automobiles, etc? What justifies differential pricing based on number of users? Other than the greed of software vendors.
In today's world, one does not buy software, one usually licenses software. When you install said software, you are required to agree with the EULA (probably without bothering to read it). Many times, you agree to abide by said EULA and any changes they decide to make in the future. There has been great gnashing of teeth when recent farmers find out they own the tractor but license the microcode that runs it. When Larry took over from Sun, I doubt that he had the intentions of losing money on Java. He did not become extremely rich by giving stuff away. Is he greedy for wanting to make lots of money? That is in the eyes of the beholder. 1. Whatever the market will bear. 2. You makes your choices when you sign up. 3. You are greedy if you make a lot of (my) money. I am an entrepreneur if I make a lot of (your) money. Alas, I didn't make a lot of anybody's money. :)
>64 It’s weird being the same age as old people. Live every day like it is your last; one day, it will be.
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has nothing to do with greed. $$ is $$. You don't have to buy it.
Charlie Gilley “They who can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety.” BF, 1759 Has never been more appropriate.
Yeah ok... charging an exorbitant amount for something has nothing to do with greed. Not sure you know what that word means. :laugh: :laugh:
Jeremy Falcon
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45 years ago, in the UK, we used JANet (Joint Academic Network) to update software and that ultimately became part of the internet so it wasn't so far off 50 years ago. I can't remember when ARPANet was set up...
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Software is a product. Much like TV, automobile, washing machine, etc. The latter are tangible while software is intangible but that is not an important difference. Once upon a time, when you bought a software, you paid one price for it, no matter how many persons in the purchaser company used it. Then they decided to charge according to the power of the processor the purchaser company used. This is like saying you have a larger living room and so the TV is higher priced. Then they decided to charge price/user. This is akin to the price of the TV or washing machine being dependent on how many persons are in the household. Now, Oracle has gone one step further and its Java licenses are based on the number of employees in the purchaser company, including janitors or messenger boys they may employ. If a customer refuses to accept the new terms, which yield hundreds of thousands if not millions of dollars more in revenue to Oracle, Oracle is threatening an audit of those companies to determine if any of the contractual terms are violated by the purchaser. Companies have sprung up to assist the purchasers in questioning the findings of these audits. What makes software different from common household goods such as TV, automobiles, etc? What justifies differential pricing based on number of users? Other than the greed of software vendors.
Yet another example, in MY OPINION, so go ahead and flame me...An example of using the latest and greatest (!) business custom and deliberately or by accident, forgetting the "business 101". I you have 10 "team members " each using a hammer (to make a product AKA money for you ) , you buy , and PAY, for a dozen hammers. ( cheaper by a dozen (rule)) . By same token, if your business require software for SAME # of "team" members" etc etc .... you use your own , (misguided) logic , to say it politically nicely and popular, AND MAKE (10 illegal) copies and call it "good business". ...until one day a kid in the crowd will yell "...the emperor is naked ..."
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45 years ago, in the UK, we used JANet (Joint Academic Network) to update software and that ultimately became part of the internet so it wasn't so far off 50 years ago. I can't remember when ARPANet was set up...
Back in the 60s I worked for Shell-Mex and BP. We had two computer centres, one in Manchester (Wythenshawe) and one in Hemel Hempstead. Once a week we needed to exchange data between the two. So each centre loaded all the data onto 3/4 inch magnetic tapes, boxed them up and popped them into a taxi. The two taxis then made their way to a rendezvous point in Birmingham where they exchanged boxes. The new tapes were then delivered to their destinations. Our centre in Wythenshawe had earlier (i.e. less advanced) systems than Hemel, so if they forgot and wrote their tapes in "high density" we could not read them. Happy days!
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Software is a product. Much like TV, automobile, washing machine, etc. The latter are tangible while software is intangible but that is not an important difference. Once upon a time, when you bought a software, you paid one price for it, no matter how many persons in the purchaser company used it. Then they decided to charge according to the power of the processor the purchaser company used. This is like saying you have a larger living room and so the TV is higher priced. Then they decided to charge price/user. This is akin to the price of the TV or washing machine being dependent on how many persons are in the household. Now, Oracle has gone one step further and its Java licenses are based on the number of employees in the purchaser company, including janitors or messenger boys they may employ. If a customer refuses to accept the new terms, which yield hundreds of thousands if not millions of dollars more in revenue to Oracle, Oracle is threatening an audit of those companies to determine if any of the contractual terms are violated by the purchaser. Companies have sprung up to assist the purchasers in questioning the findings of these audits. What makes software different from common household goods such as TV, automobiles, etc? What justifies differential pricing based on number of users? Other than the greed of software vendors.
Follow up, because I'm about to respond to Jeremy. Companies come up with licensing schemes to make money. ALL companies and I include myself as a small business have to decide how much money they want to make to stay in the market. It has to be worth the effort. And there is nothing wrong with that. The other day, I took my wife out for her retirement dinner. I live north of atlanta, and we have noticed a HUGE price jump in eating anything made in a restaurant. I had a burrito, one beer, she have her enchiladas and a glass of wine. $90. I can honestly say, I cook better than most restaurants, and my wife leaves me in the dust. What's the point? I made a decision to trade treasure for service. The result? We have more and more restaurants failing because their substandard product is overpriced. Getting back to Oracle - this is nothing new. Over the past 20 years, the industry has been trying to transition to a service/subscription based business model. It might make sense for corporations, but seriously - consumers? The fact is that companies have a product that they support, but people are happy with the old version. Back in the mid 80s, I worked for Digital Equipment. Their s/w licensing model was based on CPU performance. We kept rolling out faster and faster systems that broke the license model. It got so ridiculous that the sales people would sell a new system and then licenses for $1. Oracle is playing games, and as developers, we need to be nimble. Any wonder why Oracle bought mySQL? For example, there is NOTHING Microsoft has added to Office since 2007 that I need. *Nothing*. I am not going to pay an office 365 subscription of any form. Microsoft can do their thing, and I can keep my money. Watch when they try to monitize OS updates.
Charlie Gilley “They who can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety.” BF, 1759 Has never been more appropriate.
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Yeah ok... charging an exorbitant amount for something has nothing to do with greed. Not sure you know what that word means. :laugh: :laugh:
Jeremy Falcon
Smarty pants ;) My point is that it's a free market. Don't like the price? Don't buy it. Of course we can get into illegal cornering of markets and price fixing, etc. Did you design a system that wedded you to the evil prince? Fix it. Look at MS - they want to sell me a subscription to office? 99.999% I don't use? Really? When companies do this, they are circling the wagons because their cheese is about to be moved. Strongly recommend this book: https://www.amazon.com/Moved-Cheese-Amazing-Deal-Change/dp/B0049JMZ4W/ref=asc_df_B0049JMZ4W/?tag=hyprod-20&linkCode=df0&hvadid=693308329801&hvpos=&hvnetw=g&hvrand=17849836759272649514&hvpone=&hvptwo=&hvqmt=&hvdev=c&hvdvcmdl=&hvlocint=&hvlocphy=9010778&hvtargid=pla-1952829245456&psc=1&mcid=504da9c7808a3f22b099ede91ed84825&gad_source=1[^] There are limits to how deep you want to gouge, I'll grant you that. But if the OP is upset, they need to take it up with senior leadership.
Charlie Gilley “They who can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety.” BF, 1759 Has never been more appropriate.
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Smarty pants ;) My point is that it's a free market. Don't like the price? Don't buy it. Of course we can get into illegal cornering of markets and price fixing, etc. Did you design a system that wedded you to the evil prince? Fix it. Look at MS - they want to sell me a subscription to office? 99.999% I don't use? Really? When companies do this, they are circling the wagons because their cheese is about to be moved. Strongly recommend this book: https://www.amazon.com/Moved-Cheese-Amazing-Deal-Change/dp/B0049JMZ4W/ref=asc_df_B0049JMZ4W/?tag=hyprod-20&linkCode=df0&hvadid=693308329801&hvpos=&hvnetw=g&hvrand=17849836759272649514&hvpone=&hvptwo=&hvqmt=&hvdev=c&hvdvcmdl=&hvlocint=&hvlocphy=9010778&hvtargid=pla-1952829245456&psc=1&mcid=504da9c7808a3f22b099ede91ed84825&gad_source=1[^] There are limits to how deep you want to gouge, I'll grant you that. But if the OP is upset, they need to take it up with senior leadership.
Charlie Gilley “They who can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety.” BF, 1759 Has never been more appropriate.
charlieg wrote:
Smarty pants
Guilty. :laugh:
charlieg wrote:
My point is that it's a free market. Don't like the price? Don't buy it
Right, but that has nothing to do with greed, which was what I was talking about. If anything is more do with supply and demand. Which are indirectly based on fear and greed but that aren't directly the same thing.
charlieg wrote:
When companies do this, they are circling the wagons because their cheese is about to be moved.
I'm not sure what that metaphor means. I assume it means they're getting desparate and if so, would lend credence to my original point you seem to be trying to discredit. :~ Side note, it's in poor taste for unsolicited book recommendations. It's presumptuous and assumes I know little of the subject. I can promise you, nothing could be further from the truth.
charlieg wrote:
But if the OP is upset, they need to take it up with senior leadership.
This has nothing to do with greed being the driving factor behind a lot of new pricing models.
Jeremy Falcon
