* * * * *

                         “Where I want you to be … ”

> It's 1997. You call up the 800 number to order another computer, and after
> you've chosen between the Alpha-III and the Octium chip and the 15 and 30
> gigabyte hard drive, the salesperson tells you that the machine comes with
> the “Basic Package” of Windows NT, Word, Excel, Access, Money, and
> Multimedia Producer, and asks if you'd like to turn on any additional
> software at the time. You request Project, Designer, and Visual C++, and
> they're enabled also. In any case, you're told, “it's all on the CD-ROM, so
> you don't have to decide right now”.
>
> Now let's look into the other end of the binoculars; from Bill Gates' chair
> rather than his customers'. Today, there more than 125 million MS-DOS
> personal computers installed. Given the rapid adoption of Windows and
> sustained high sales rate of new machines driven by price performance
> improvements in new chips, I believe it conservative to expect that 100
> million Windows NT machines will be installed 4 years from today, most
> equipped with CD-ROM, multimedia accessories, and contemporary peripherals;
> some upgraded from current high-end MS-DOS machines, but most new machines
> of the Pentium/Alpha generation and their successors. Further, let us
> assume that Microsoft is unsuccessful in selling any software other than
> the Basic set (I'm sure you'll concede, based on Microsoft's new product
> success rate, this assumption is conservative). Well, multiply it out.
> That's 100 million machines times US$10 per month times 12 months per year,
> and the answer is: US$12 Billion-with-a-B-like-Bill per year of automatic
> recurring revenue for which the marketing costs are essentially nil and
> distribution margin is nonexistent since fulfillment is direct.
>

Programs Are Programs [1]

Microsoft [2] in the past year or so has been pushing for software
subscription, much like we do now with cable TV (television) (as pointed out
in the article). After all, programs are programs.

Also mentioned in the article is Bill Gates wanting to shift to software
subscription in **1992!**

And to think that there actually does exist an American company that can
think more than two quarters out.

While consumer reaction to Microsoft's attempts to shift to a subscription
base have been negative, Microsoft also realizes that it's not the end user
that pays its bills—it's the corporate accounts that do, and selling a
subscription to corporations is probably an easier sell there. Predictable
billing cycles and an easier amorization schedule will do that. And as the
article states:

> I think the answer lies in the observation that most companies who succeed
> in building self-sustaining subscription-based businesses start from a
> position of effective monopoly of their sector. In the case of AT&T
> (American Telephone and Telegraph), it was a combination of technology,
> patents, and government grants which conferred the monopoly. IBM (IBM-
> formerly Internation Business Machines) built its first monopoly in
> tabulating equipment on the patent of the Hollerith card, then clawed its
> way to an effective monopoly in computers by out marketing and out-customer
> servicing Remington Rand, Burroughs, and others. Xerox derived its monopoly
> from the patent on xerography.
>

The article itself is dated from 1993 (the last update reported by the
webserver is 1998, but that may be when the page was uploaded to the server)
which may have been around the time the first real mumblings of Microsoft
being a “monopoly” at the DOJ (Department of Justice) were being heard but I
think that even back then in 1993 it was a forgone conclusion that Micosoft
was indeed a monopoly, and thus had the power to switch to a subscription
base for its software offerings.

Not that Microsoft has actually done that. Yet.

Okay, excluding the Microsoft Developer Network, it hasn't done that.

Yet.

And if Bill Gates was thinking of this in 1992 I have to wonder what he's got
in store for 2012 … then again, the world is expected to end in 2012 [3] …
hmmmmmm …

[1] http://www.fourmilab.ch/documents/ProgramsArePrograms.html
[2] http://www.microsoft.com/
[3] http://www.google.com/search?hl=en&ie=UTF-8&oe=UTF-8&q=2012+end+of+world&btnG=Google+Search

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