Setback in Adoption of Subscription Pricing Highlights Challenges of New Model for Software Vendors, While Flexible Electronic Licensing Continues to Grow
SANTA CLARA, Calif. Â– October 17, 2006-Results of the 2006/2007 "Key Trends in Software Pricing and Licensing" survey, released today at the annual SoftSummit conference, reveal that the number of software vendors offering subscription-based pricing models declined from the previous year's findings, after experiencing strong growth in 2005.
In the 2005/2006 survey 40 percent of software vendors had begun delivering subscription-pricing to their customers, while in this year's survey only 32 percent were offering subscription models. Despite the setback in adoption, however, the vendors surveyed remain optimistic about the new pricing model, with 49 percent of survey respondents expecting subscription software to be their primary offering by 2008.
While the number of software providers offering subscription pricing declined unexpectedly in light of the previous year's enthusiasm, the results of the 2006/2007 survey emphasized that software vendors have accrued important benefits from adopting more flexible pricing and licensing models. Survey respondents cited improved customer relations, increased revenue and an accelerated sales cycle as the most frequent outcomes of their transition to flexible pricing and licensing policies.
"There are certainly technical and business challenges in transitioning to new models like subscription pricing, but there are also significant benefits for software vendors that deliver more flexible and easy to manage licensing schemes," said Buff Jones, executive vice president and general manager of products for Macrovision. "While software licensing in the past has largely been a necessary accounting tool, it is now becoming a key aspect of strategic marketing Â– the vendors that can package and deliver flexible versions of their software through electronic licenses will be the innovators who attract and retain customers."
Additional key findings in the 2006/2007 survey include:
Electronic/digital enforcement of licenses is gaining popularity among software vendors, with usage increasing eight percent and expected to rise another 10 percent by 2008.
75 percent of the enterprises surveyed expressed high levels of confidence in total software license compliance, an increase of 32 percent from last year's results.
58 percent of enterprise customers strongly prefer the concurrent user license model; in contrast, software vendors indicated that the seat (per machine/per user) license model remains most prevalent.
The annual SoftSummit software licensing study, "Key Trends in Software Pricing and Licensing," was sponsored by Centralized Electronic Licensing User Group (CELUG), Macrovision Corporation (NASDAQ: MVSN), Silicon Valley Product Management Association (SVPMA) and the Software & Information Industry Association (SIIA). The survey reflects pricing and licensing trends and best practices in the software industry among executives at both independent software vendors (ISVs) and software buyers (enterprises). The study is based on results of a survey conducted in September 2006 of approximately 700 respondents.
The third annual report will be released on October 17, 2006 at the annual SoftSummit Conference in Santa Clara, California [www.softsummit.com].
SoftSummit is the industry's premier executive conference that is dedicated to strategies, trends and best practices for software licensing and pricing as well as application packaging and license tracking. At SoftSummit 2006, industry experts and executives from leading organizations will gather for two days to discuss real world perspectives about the challenges, strategies, and best practices for managing and optimizing the changing dynamics in their businesses. For more information or to register, visit www.softsummit.com.
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