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February 10, 2014 • Editorials

It’s a Subscription World, and We Just Live In It

customers_life

HP is causing a bit of a firestorm with their recent announcement that enterprise customers with HP ProLiant Servers will no longer have access to firmware updates past their initial warranty period unless customers have enrolled in a Care Pack Service or support agreement. Apparently HP did not see the irony in their blog post titled “Customers for life”.

In essence you must keep paying HP for as long as you own that HP ProLiant server. This is a change from previous policy where firmware updates were made available simply by searching the company’s support center and downloading them.

Which brings me to my thought for the day. Technology as a whole has gone from an industry of one-off purchases to one of recurring subscriptions. We can download and use limited versions of consumer applications such as Spotify or Google Play Music. However continued use requires ongoing recurring subscriptions. Microsoft has turned from selling Microsoft Office for a one time payment to a recurring subscription based Office 360.

Stop paying and the service gets shut off. That’s easy to understand. However once customers are locked into recurring payments, is there much incentive to improve the underlying product or service they subscribe to?

When we as consumers are locked into subscriptions, it completely removes the incentive for those who sell the subscription to materially improve their product or services.  This plays out time and time again in the enterprise world where corporate software has long been attached to expensive recurring payments for continued use. The more difficult it would be to move away from a service (aka lock-in) the less incentive to improve that service.

Where exactly is the subscription tipping point? How many subscriptions will enterprises and consumers tolerate? At some point, will the pendulum swing back away from subscriptions, and will we see the day when services once again are one price for unlimited use?  Will enterprise and consumers purchase continue to purchase any type of hardware which requires recurring subscription payments to keep it running?

2 Responses to " It’s a Subscription World, and We Just Live In It "

  1. loopyduck says:

    >When we as consumers are locked into subscriptions, it completely removes the incentive for those who sell the subscription to materially improve their product or services.

    Of course, on the opposite end of the spectrum, we have cases like WB Games, who have stated in reference to the highly buggy (to the point where it’s unplayable for quite a few people) game Batman: Arkham Origins:

    “The team is currently working hard on the upcoming story DLC and there currently are no plans for releasing another patch to address the issues that have been reported on the forums.”

    Once they have your money, what’s their incentive to fix/improve the product?

    P.S. It’s Office 365, not 360.

  2. gorkon says:

    You see I don’t get this. I would understand if you could actually use the firmware on other servers but since it only works on a specific Proliant server this amounts to basically forcing you to buy an extended warranty.

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