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New driving force for the SaaS model

Filed in archive Market Perturbations by steve on May 10, 2005

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The tech beat, is talking about, How software companies are having to change the way they charge for the software given the changes in the processor segment. How multiple processor on one Chiplinks is causing problems for the "per processor licenses". Also the piece highlights how chip makers are suggesting that the software maker's move to a pay as you go model, as that is what the customers really want.

Excerpts:

Result of the shift to produce microprocessor chips with more than one processor on them. Since many software companies charge their customers for products based on the number of processors in a server computer, this is making them rethink the way they charge.

Interestingly, this tempest may result in the tech world shifting over to utility computing--customers paying for processing power only when they need it--even faster than pundits expected.
Here's AMD's recommendation for how software ought to be licensed.

Software companies have a whole bunch of ways they charge for server software. They include site licenses, fees based on the number of computers, fees based on the number of users, and others. Eventually, according to Margaret Lewis, senior software strategist for AMD, utility computing will be the new model for charging. "Customers are going to demand a pay-for-what-you-get model. The faster the software vendors figure that out the better off they'll be," she says.

Of course, it's easy for a chip maker to lecture software makers on what they ought to do. But the software giants are heading in this direction. The only question is how long it takes them to get to the destination.
Looks like most enterprise software solutions need to rethink thier approach to licensing


Prashanth Rai


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