By Dave Kearns
Last week, and continuing this week, I've been using the Windows Networking newsletter to explore the seemingly annual changes to Microsoft's licensing agreements as the Redmond behemoth tries to find the best way to extract the most dollars from its customers.
Novell PR maven extraordinaire Bruce Lowry points out in his blog that the very idea of licensing might be the key to removing Microsoft's dominance in the software arena.
He points out that while we usually consider open source as a development model (a community of interested parties working together to develop an application or service) it's also a business model. Lowry posits that: "We're moving from a world built on a software licensing model to one built on a subscription model around services and upgrade protection. This is what we've all called 'maintenance' in the traditional software world."
That may be a self-serving prophecy, as Novell's licensing revenue continues to fall while its maintenance revenue shows a slow-but-steady increase. Licensing income is falling faster than maintenance income is rising, but Novell does have deep pockets. (For a closer look at Novell's financials, see its most recent quarterly report.)
Lowry concludes that: "This [Novell's greater dependence on maintenance revenue] makes the move to subscription revenue under an open-source model less disruptive to us than it might be to companies still heavily dependent on license revenues. You can figure out who those companies might be." One assumes he turned, faced the northwest and winked in the general direction of Redmond, Wash., when he said that.
He's not the only one who thinks that Microsoft is having trouble in moving from licensing- to subscription-based revenue. About the upcoming release of Microsoft Windows Vista, Gartner Group said: "Microsoft wishes to release a new version of Windows by year-end 2006 to shore up revenue and appease customers that paid for Software Assurance on the client OS..." (See "Figuring out Microsoft licenses is hungry work" for my newsletter about Microsoft licenses.)
Novell's licensing, maintenance and upgrade protection have always been easier to figure out than Microsoft's. Some thought it was because Novell offered fewer products bundled in fewer assortments. Or, just maybe, Novell has always understood better than Gates and Company what the future revenue stream should look like.
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To contact Dave Kearns:
Dave Kearns is a writer and consultant in Silicon Valley. He's written a number of books including the (sadly) now out of print "Peter Norton's Complete Guide to Networks." His musings can be found here.