1. Subscription over licensing new tech mantra

Subscription over licensing new tech mantra

Technology firms are increasingly moving towards a subscription model for selling their software products in India, as opposed to the licensing model.

By: | New Delhi | Updated: October 4, 2015 12:51 AM
TECH mantra

With Internet penetration increasing in India along with smartphones, software firms are bullish that the subscription model would yield them higher revenue. (AP)

Technology firms are increasingly moving towards a subscription model for selling their software products in India, as opposed to the licensing model. Apart from curbing piracy, the companies are able to offer facilities like enabling users to use the software from any location or computer compared to a fixed location/computer in the licensing model.

Moreover, despite charges for subscription being much less than licensing rates, software firms like Google, Microsoft, Facebook, etc, do not expect to lose revenue because of higher volumes.

For instance, Microsoft Corp has sliced its Windows software products such as Word and Excel, and has launched Office365 for a subscription fee of R330 a month for a personal user to access its software, whereas it would be R420 a month for a student edition. That works out to R3,960 for a year for personal use, and R5,040 per year for a home and student edition. Compared to this, if the same user purchases a licence for using the same software, it could be about R5,499 for the Office 2013 edition, and much higher at R5,999 for a home and student edition.

When Microsoft rolled out its Office 2016 edition last week, it had increased the price of its licensing software, but kept the prices same for the subscription model. “The subscription prices for the kind of services that come with it are attractive,” says Alok Lall, director, Microsoft Office Division, Microsoft India. “It makes absolute sense to choose the cloud.”

Similarly, Apple has rolled out its music streaming service in India for as low as R120 for a month’s subscription.

Google offers its full suite of services, including email, with 100 gigabyte space for $1.99, or about R132 as subscription fee for a month. Facebook allows small and home-based businesses to advertise on its social networking platform and attract prospective customers for as less as $5, or about R332 per year. Amazon Inc has also rolled out subscription plans at R120 per month in India to access its vast library of books on its iconic Kindle e-reader. Earlier, Amazon business model was selling books at cover rates, which was expensive for users to buy and store on their Kindle readers.

“Lower barriers of entry leads to volume, which translates into big numbers over a period of time,” says Girish Trivedi, co-founder of Monk Consulting, a New Delhi-based technology advisory firm.

The low-cost subscription strategy is targeted at young and technology-savvy consumers who are also cost-conscious, and already use some of the services offered by these companies, he says. “For the young and savvy with limitation to monthly spends, it’s a great push strategy to make them try a product at a lower price range,” Trivedi adds.

With Internet penetration increasing in India along with smartphones, software firms are bullish that the subscription model would yield them higher revenue. Further, the use of their products would also increase in the small and medium industries.

  1. N
    NetLicensing
    Oct 11, 2015 at 11:46 pm
    The same trend we are observing analysing Labs64 NetLicensing ( ) licensing models statistics - most of the software vendors are selecting either subscription or rental licensing model. This became definitely a trend in the last years.
    Reply

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