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MOBILE TO IMPACT PRICING?

This is more theory than observation. But since platform changes produce what I call “catastrophic pricing collapse” we should see application prices drop as mobile pressures desktop pricing. Think about the change from mainframes and minis to PCs, the price of the original Peachtree software (once priced at $5,000) to low-end list prices today, the amazing drop in storage pricing, all accompanied by increased capacity and performance.

Prices do not fall slightly when platforms change or there are significant improvements in performance and function; they decline exponentially. Consider the generation of younger users accustomed to app pricing at the iTunes store. This group is going to expect the software will not cost so much. The change is going to be stemmed somewhat by subscription pricing. But I believe the next generation of buyers is not going to be happy with current pricing levels. Subscription pricing is not going to be able to counter the fact that software is not just becoming a service, it is becoming a utility like electricity and the telephone. The other question is whether subscription pricing can recover lost maintenance revenue stream of desktop applications. Does the recapturing the expense of data center construction, operation and maintenance as cost element equal lost maintenance income?

 

 

 

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