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Google Replaces Beta Tag With Price Tag on Apps

Just a short note:

Guess who will welcome GooGreed with a big smile?  Zoho.

Update:  TechCrunch has the clarification from Google:

In experimenting with a number of different landing page layouts, the link to Standard Edition was inadvertently dropped from one of the variations. We are in the process of restoring it and you should see it soon. We have no intention of eliminating Google Apps Standard Edition, and are sorry for the confusion.

Related posts:

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SaaS and the Commoditization of the Software Market

Office 2007 Reaches a New Low – reports Joe Wilcox @eWeek.  He means low prices:  while Office Standard is still above $300, the Home and Student Edition can be purchased for as little as $89.99.

He then speculates on the reasons for this “Crazy Eddie”  pricing, with percentage of likelihood:

  • It’s end of the back-to-school buying season, when Microsoft and retailers often discount consumer Office (50 percent).
  • Microsoft is seeding the consumer market with the Home and Student Trojan horse for supporting Web services such as Office Live Workspace (25 percent).
  • The low pricing is way of psychologically preparing the consumer market for $69.95 Office Equipt, which packs 12-month subscription versions of Office 2007 Home and Student Edition, Windows Live OneCare, Mail, Messenger and Photo Gallery. (20 percent).
  • Microsoft is shoring up marketshare as proactive response to freebees like Google Docs. (5 percent).”

I strongly believe in the last one, which is way underrated at 5%.  With freely available OpenOffice, Google Docs and the Zoho Suite, people have little reason left to purchasing Microsoft Office.  I’ve said this before, while discussing the perfectly rightful clampdown on piracy:

The danger for Microsoft is not the direct financial impact of these users turning away from their product, since the never paid in the first place. It’s losing their grip; the behavioral, cultural change, the very fact that millions of people – students, freelancers, moonlighters, small business workers,  unemployed – realize that they no longer need a Microsoft product to work with MS file formats.  Microsoft shows these non-customer users the door, and they won’t come back – not even tomorrow when they are IT consultants, corporate managers, executives.  That’s Microsoft’s real loss.

But this post is about commoditization, and there’s more to it than putting price-pressure on Microsoft. Yes, SaaS disrupts the traditional software market, but there’s another equally important trend happening: some of the early pioneers who evangelized SaaS but retained a 1.0 business model are being squeezed by more nimble competitors. 

Days after my post on SaaS and the Shifting Software Business Model I received an email from Salesforce.com, announcing new, promotional pricing for Salesforce Group Edition.  The promo was supposed to end July 31st, but I suspected this would become a permanent price cut.  Why?  Group Edition is where Salesforce.com feels intense price pressure – see the comparative matrix here.  Today I checked again, and what a surprise (not really) –  the promo deadline is now gone, Salesforce.com silently turned the promotion into a permanent price-cut

No wonder there wasn’t much fanfare: price cuts are a red flag for the Street.  Commoditization can be a death-spiral to businesses – except for the few that drive it. But it is beneficial to customers, and in the end, that’s what matters.

(Disclaimer: I am an advisor to Zoho, the company with a mission of Deflating IT).

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Microsoft is Freeing Users from Office-Prison

The likely reason news of Microsoft’s Office 2007 “Kill Switch” did not cause a lot more uproar is that it surfaced during Thanksgiving week:

“Buried in a Knowledge Base article that Microsoft published to the Web on November 14 are details of Microsoft’s plans to combat Office 2007 piracy via new Office Genuine Advantage lockdowns.

Office 2007 users who can’t or won’t pass activation muster within a set time period will be moved into “reduced-functionality mode.””

As unpopular as this move will be, it’s perfectly within Microsoft’s rights to dump users who don’t become customers. The question is, is it a smart move? ZDNet attempts to do the math in The economics of Microsoft’s kill switch:

“Would you sacrifice $10 million in sales to prevent $1 billion in software piracy? How about $100 million? How many customers would you annoy?”

I don’t think it’s simply a numbers game. Whatever Microsoft’s “loss” to piracy is, it’s not going to be converted to sales. First of all, the “kill switch” comes with the retail product, large corporate customers volume licence is not affected.  So we’re talking about smaller businesses and individuals (I am focusing on the US market). A fraction of these may be “forced”  to buy a licence, but the large majority won’t.   What we really need to look at is why these users run MS Office in the first place.

“The simple argument that ‘this is good enough for 90 percent of what we do’ has fallen on its face over and over and over again,”Microsoft would like us to think.

I don’t buy it.  I don’t use fancy features in Word, have repeatedly stated that my Excel skills are on the level I learned using Lotus 1-2-3 – yet I have Office on my computer.  So does virtually anyone who occasionally needs to receive/send files to Corporate America.  Not because they need all the features, but out of fear (losing compatibility) and laziness.   But believe me, these users will rather switch to another product than shell out hundreds of dollars for a MS licence.

They might actually find the experience quite rewarding.  OpenOffice is a free alternative, but it’s big, clumsy, needs installation and updates just like MS Office – web-based alternatives, “Office 2.0” products are increasingly powerful, fast, easy-to-use, and allow one to access files anywhere.  It’s safer in the cloud smile_wink.
Office 2.0 vendors bend over backwards to make it easier to work with Microsoft files.  Zoho ( a Client of mine) has a full online Office Suite that easily imports MS files, and of course saves your work in doc, xls and other MS formats, just as well as PDF and several others.  The Zoho Quickread plugin allows opening of any MS Office files directly from the browser (IE, FF) without first importing/converting them. Tomorrow Zoho will release plugins for the major MS Office products, making it easy to save files online directly from within the Office applications.

The danger for Microsoft is not the direct financial impact of these users turning away from their product, since the never paid in the first place. It’s losing their grip; the behavioral, cultural change, the very fact that millions of people – students, freelancers, moonlighters, small business workers,  unemployed – realize that they no longer need a Microsoft product to work with MS file formats.  Microsoft shows these non-customer users the door, and they won’t come back – not even tomorrow when they are IT consultants, corporate managers, executives.  That’s Microsoft’s real loss.

Update (11/30):  See TechCrunch and the Zoho blog on the new announcements.