Orion: Pay by the pound

In 2002, I participated in an interview with Sun VP Jonathan Schwartz, who rates as one of my favorite vendor celebrities. He was busy ragging on Microsoft, as Sun was given to do, and was full stride into a rant on Windows’ weird pricing and licensing schemes. “Oh,” I said, “so you’re not a fan of software subscriptions?” That was a common complaint at the time; Microsoft didn’t sell software any more, it rented it. Schwartz said no, Sun isn’t against subscriptions. Indeed, he said, it’s a model worth considering.

That consideration is complete. Sun’s Java Enterprise System (FKA Orion) will be sold for $100 per year, per employee. Per user? Per connection? No, per company employee, every full-time employee from the system room to the janitorial staff. No matter how many CPUs, apps, devices or external users, the flat $100/year/employee covers it. And that price includes a fixed amount of training and support relative to the number of employees.

I’m pretty old school where commercial software is concerned. I champion buying an application once and running it until its tires fall off. Mandatory subscriptions bring to my mind the cackle of Snidely Whiplash–“but you must pay the rent!”

I all but tortured Sun over its subscription plan at the SunNetwork conference in September. I didn’t come away convinced of the superiority of the pay-by-the-pound strategy, but my concerns about the lack of alternatives were assuaged. Sun will continue to offer traditional, pay once pricing. Existing Sun customers won’t be affected unless they choose to switch to a subscription. But Sun claims that its $100/employee/year policy is drawing cheers from customers.

For start-ups and small businesses, the benefits are obvious. Sun is, in effect, buying in at the ground floor of growing companies. Every JES account that grows and adds staff becomes more profitable for Sun.

For large companies, Sun’s plan reduces sticker shock and spreads operational costs over a longer period. The payments can be written off when they’re paid, and the company can quit Sun’s software simply by ceasing payments.

In the current economy that makes borrowing so cheap, the benefits of subscriptions for large companies are less apparent. But outright purchases presume that the value of the asset being acquired will never diminish. Sun is offering customers the chance to quit using JES the instant it stops delivering value. You don’t argue with Sun over prorated refunds. You just quit writing checks.

So, as much as subscriptions rankle old school types like me, periodic payments–at least as Sun has structured them–do make costly business software accessible to smaller organizations, and they might make better overall business sense overall. I guess I’ll learn to adjust.

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