Oh What a lovely day

Cloudy with a Chance of Metering?

In the spray-on chrome frenzy to banish the very concept of perpetual software licenses before anyone stops to think and/or notice, professional authoring software is fully embracing cloud subscription Valhalla, with Adobe infamously leading the way. Considering Adobe’s bold push into cloud has netted them cartoonish amounts of cash, established CAD vendors who were cautiously dipping into subscription models are no doubt looking redeem themselves. After all, what works for creative workflows should work for engineering, right? While Adobe successfully squashed early Creative Cloud resistance by deep discounting and even providing a dedicated Photography plan, long-term affordability is about as likely as a far away green place. On the engineering front, however, resistance to cloud subscriptions is more resolute. Do not, my friends, become addicted to the cloud. It will take hold of you, and you will resent its absence!  Which leaves an important question: Is there still room to innovate with cloud subscription models?

Pondering that question requires understanding that Adobe’s cloud success so far hinges on two important facts in the creative market:

  1. The creative agencies serving as Adobe’s most profitable customers not only uses a wide breadth of available Adobe tools in their workflows, but also afford to upgrade that software on a regular basis.
  2. With no directly competing suite of solutions, the market currently provides no viable alternative without cobbling together a bunch of random bits, kind of like putting a running car together in the apocalypse.

This scenario is a win-win for the dedicated. The target creative agencies receive a small discount on the software they have been regularly buying, and cutout all the annoying purchasing and delivery logistics. Adobe in turn gains normalization of their software revenue, eliminating the periodic potholes in revenue road associated with software lifecycles. This leaves all the excitable stockholder war boys feeling positively historic.

But the CAD world differs significantly:

  1. Most customers aren’t rushing to upgrade often enough, choosing instead to pay license maintenance fealty only, or in other cases just go off into the wastelands sans support, satisfied they can survive with what they’ve got. Frequent and/or continuous upgrades might even be seen as disruptive, breaking some customizations or integrations with other enterprise software, such as PDM/PLM.
  2. The CAD space is diverse, and while moving to alternatives might be painful due to proprietary formats and perpetual CAD translation struggles, they nonetheless exist.

From a cost basis, the Adobe monthly all-you-can-eat Creative Cloud buffet loses its shiny chrome for customers that either used only one or two applications from the entire suite, purchased upgrades only occasionally (every 2-3 years on average) or simply used the software on an infrequent basis. For all these cases, the math works out unfavorably. This is true even with the introductory promotional discounts Adobe handed out to everyone and their dog in order to spur rapid adoption. Some early adopters who thought they scored a deal are beginning to scratch their heads a bit as the promotional rates expire at renewal, jumping from $30/month to $50/month. But it’s not just present cost that should be considered, but future costs. In regards to future price increases, Adobe has basically pinky-sworn that they won’t raise prices on cloud subscriptions. Which I’m sure will hold true up until they do. And if you believe they never will, and will instead perpetuate discounts as more participate in the cloud, then I’ve got a few bullet farms I’d like to sell ya. The deal turns sour the moment you stop paying, losing access to edit content you have created until you ante up, with only a short window to offload all data you’ve chosen to store in their cloud. There’s only one word for this kind of subscription model: Mediocre.

The monthly all-you-can-eat buffet lacks diversity in offering what may or may not fly in the land of engineering. However, the interesting thing about cloud is that the limitations of how software is delivered, billed, and managed can be completely thrown out the window. Just about anything is possible. So why then are all subscription programs unimaginatively following the same monthly construct? Perhaps one alternative is metered subscriptions.

Software could be billed by discrete usage on a metered basis, by the day or even by the hour like a water or electricity bill. This could be metered on a functional basis as well, so if all the new features are useless for your application, then you don’t pay for them. The all-you-can-eat plans could be maintained for heaviest users who currently benefit from them. For everyone else, metered plans could provide flexibility, still allowing access to the breadth of application functionality, but only when and how they use it. That alone could bring costs in line with occasionally purchased perpetual licenses and/or occasional use. Terminating a subscription under such a model becomes less of an issue; just don’t use the software anymore. And if you chose to use it again in the future to rightfully edit the content you created, you’ll just be charged that small incremental use. Seems fair enough. There’s an additional benefit as well, the software provider is incentivized to continue adding or improving features to attract higher consistent usage. There’s still no protection from rate increases, but unlike a monthly or annual subscription, exposure to that increase is vastly reduced. The biggest question is how many of those left behind by current subscription models would be willing to consider such a radical alternative, does it make sense or is it just Mad Max style lunacy? Let me know in the comments.

  • Ryan

    Ed-
    Great article and I enjoyed you thoughts and comments. As you mentioned CAD/PDM/PLM is a different animal than Creative Suite (CS).
    If we look at the current functions in the CAD world that are running in the cloud we see that we are missing quite a bit. What happens when the users are required to do things like FEA and need to utilize multiple CPUs or the average users using CAD 30-40 hrs a week. Is there an upcharge for GPU time for the general CAD user or multiple core charges for FEA? I feel that these line items need to be explored before we all go to Bartertown and find out that things are not as simple we all thought. That Blaster (internet) has its weakness(constant connectivity and bandwidth.) Master (the CAD companies) with all good intentions created an environment run on marketing “crap” which creates a world that no one really wants but doesn’t have a choice because they can’t get out of the desert they are now in.
    For some users it appears that Jan 31, 2016 is your Thunderdome date. I sure hope that they don’t get hungry and eat some pork! (Gotta watch the movie to understand that last comment!)