In the Business section of last Wednesday’s Toronto Star, energy reporter Tyler Hamilton penned a column on power-based billing by datacenter services provider Q9 Networks Inc. Rather than bill for space, Q9 chief executive officer Osama Arafat is quoted in Hamilton’s article stating:
… when customers buy co-location from us, they now buy a certain number of volt-amps, which is a certain amount of peak power. We treat power like space. It’s reserved for the customer.
Power-based billing represents a paradigm shift in quantifying usage for Q9.
Along with an entirely new business model, this shift represents a calculated, proactive response to market realities; to quote Osama from Hamilton’s article again:
Manufacturers started making the equipment smaller and smaller. Customers started telling data centre providers like us that they wanted to consolidate equipment in 10 cabinets into one.
The licensing of commercial software is desparately in need of an analogous overhaul.
Even if attention is restricted to the relatively simple case of the isolated desktop, multicore CPUs and/or virtualized environments are causing commercial software vendors to revisit their licensing models. If the desktop is networked in any sense, the need to recontextualize licensing is heightened.
Commercial software vendors have experimented with licensing locality in:
- Time – Limiting licenses on the basis of time, e.g., allowing usage for a finite period of time with a temporary or subscription-based license, or time-insensitive usage in the case of a permanent license
- Place – Limiting licensing on the basis of place, e.g., tieing usage to hardware on the basis of a unique host identifier
Although commercial software vendors have attempted to be responsive to market realities, there have been only incremental modifications to the existing licensing models. Add to this the increased requirements emerging from areas such as Grid Computing, as virtual organizations necessarily transect geographic and/or organizational boundaries, and it becomes very clear that a new usage paradigm is required.
With respect to the licensing of their commercial software, the situation is not unlike Q9’s prior to the development of power-based billing. What’s appealing about Q9’s new way of quantifying usage is its simplicity and, of course, its usefulness.
It’s difficult, however, to conceive such a simple yet effective analog in the case of licensing commercial software. Perhaps this is where the Open Grid Forum (OGF) could play a facilitative role in developing a standardized licensing framework. To move swiftly towards tangible outcomes, however, the initial emphasis needs to focus on a new way of quantifying the usage of commercial software that is not tailored to idealized and/or specific environments.
Agreed a new paradigm is needed, but if you think about it there are already a few out there – shareware or freeware have the advantage of not needing to trace licencing issues and contribute to the concept of global sharing for the good of mankind, or build the collective cyber conciosness. You just have to somehow take money out of the equation and it is all so simple. OTOH of course people have to make a living and software developers are people – I don’t know how to solve that problem yet – well if you could expand the whole concept to the entire world economy then living would be free too! But then you get free loaders…
Where is utopia?
The model should be simple. Why not charge a flat fee for the software and a pay per call for technical support. Setup a Training University to provide training on how to use the application. As well, charge an optional fee for upgrades (excluding bug fixes) and revised versions of the software after the first year.
There is no need to gouge because, otherwise, companies will go in droves to the open source market which does really well with its own model.
CEO & Chief Virtual Organization
NetWEB Elite Solutions, Inc
Founder & Professor
Virtual Organization Management Institute
Keeping It Simple.