The real innovation of the *aaS model is that you no longer need to compete with prior versions of your own software or hardware infrastructure. You can hike prices, cut engineering costs, cut some nines off your availability, defeature, or just plain embrace incompetence, and, in the short term, it will improve your balance sheet.
Of course, in the long term, customers will revolt, and do so swiftly, and without mercy.
I don't know. I think a lot of people have decided they like things like the Adobe products subscription.
Instead of the several thousand dollars you would have had to pay for the various softwares in the lineup up front, you just pay $50 a month. Which is reasonable of you previously used more than just Photoshop and maybe upgraded every 3 to 4 years.
If the end result is a similar cost, I would much rather keep my capital in the business and make a monthly payment.
I do some vector design work maybe once a month. I'd love to buy a license for Illustrator, if it cost whatever it used to cost before Creative Cloud. I would use it for a long time.
But 50€ per month is too much. So I bought a license for Affinity Designer instead. It covers most of my needs, and it's no subscription. I also bought a license for Sketch, since the subscription is optional.
I'd love to use the same tools as professional designers, but they've become too expensive.
They never became more expensive. They were extremely expensive to begin with and now they’re a lot cheaper. Previously it was like 500€ or so? That's too much for the casual user as well.
Here’s the reality. I used to pirate Adobe software because there was no way I was going to pay 1500k or whatever Photoshop was. Adobe got $0 from me.
Now I subscribe to get access to Photoshop. Adobe now gets £100 from me a year. I’m not the only person I know who went through this.
Of course, cheaper alternatives always existed. Adobe’s adoptance of subscription pricing hasn’t changed that.
I just checked the illustrator website. One year costs 287,77€. So it's only cheaper if you updated at least every two years. But I use my software a lot longer than that.
Software used to be an investment. At university, our physics department had a lot of old computers standing around, whose only purpose was to run some specific legacy software that was no longer maintained, but still worked perfectly.
During my time there, I convinced the theoretical physics department to buy a few Illustrator licenses so we could make better diagrams. I think the academic license cost 300€ per seat. They probably never updated, but I'd assume they still have a PC somewhere with one of those licenses installed, and if someone has a PDF from Inkscape with an incorrect Color Profile, they could still use that machine to fix it.
I think you underestimate how many people use old software out there. Sure, we tech folks update every year, but people who work outside of the tech bubble don't always upgrade a system that's working perfectly fine.
they are way way more expensive now. I only upgraded every other version so $199 every 4 years or $50 a year. current Photoshop subscriptions is $239 a year or nearly 5x the price
Where are you getting your prices? I never remember being able to buy photoshop for $199. I remember it more like $600+. And the website shows $120 annually and that includes Photoshop AND lightroom AND 20GB of cloud storage.
If you need more than just photoshop, the deal is even better.
What? Am I doing my math wrong? Photoshop upgrades were always $199. Photoshop subscriptions are $239 a year. So upgrading every 3 year is $199 vs paying a subscription for 3 year is $747. How is paying nearly 3x keeping money in your business?
The $199 upgrades were only after the initial PS purchase price of $699. The PS-only subscription is $9.99 a month. The $239 a year one "Includes 100GB of cloud storage, your own portfolio website, premium fonts, and social media tools". It is way cheaper now unless you go 5+ years without upgrades.
I wouldn't put any value to those perks. The average use of that 100GB storage is likely to be a very small fraction of that and all will cost pennies or less for Adobe to provide. Yes, if you just so happen to be in the market for all of those it would cost you some amount to source them independently. But the trend of bundling low-cost tangential services as a pricing defence strikes me as rather cynical.
You skipped over the meat of his post. If you don't need those extras, you can get photoshop AND lightroom for $9.99 a month. So you are getting it cheaper than you ever could.
There are some benefits in terms of product as well, if Adobe knows they have subscription revenue then they may be more focussed on fixing bugs and keeping existing customers than adding dubious features in an attempt to get upgrade revenue.
It works for Adobe, ReSharper or MSDN because people make their livelihoods off it. It makes less sense when it's a utility (window management) or tangential to your actual revenue stream (keeping notes).
Releasing new features and improvements is highly incentivized in the *aaS model. It’s the main way of boosting ARPC, and as you mentioned, if you fail to do it, you’ll be very vulnerable to competition. It doesn’t alway suit every situation, but in those that it does, it benefits both consumers and merchants.
Of course, in the long term, customers will revolt, and do so swiftly, and without mercy.