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Software: how do you want to pay today?

By John Oates

Published: Wednesday 14 June 2000

Microsoft announced yesterday that in the future it will charge for its server software on a per processor rather than per user basis.

The move is a belated response to customer demands for a better way to pay the software giant and is likely to be welcomed by many users.

In essence there are four ways to pay for software:

1. By the number of individual users (that is, by 'seat')

2. Per transaction - the model used by many online marketplaces,

3. Per processor

4. Or by the number of concurrent users - working out an average number of people using the product at any one time.

All the models cause potential headaches for IT directors, but it's less likely that an additional processor will appear in a server than an extra or temporary member of staff turn up at the office.

The decision is also good news for smaller companies with less time to waste trying to placate the Business Software Alliance (BSA) and Federation Against Software Theft (Fast).

What the announcement fails to do is address the underlying problem. Software companies are with few exceptions no longer software companies. They either sell or claim to sell services and solutions rather than produce lines of code. Hence the shift by many to giving the code away or renting it along an ASP (application service provider) model.

This is what the future looks like, more so than a per processor model touted by Microsoft and others. Businesses renting software as it is required and either paying by the minute or using a service which covers its costs by advertising to its users.