Software as a Service

Buying and selling software online is nothing new, especially to us here at asknet. The charme/particular with buying software online is, that the product can be made available delivered right away through the internet and  per download or recently more and more on demand as Software as a Service (SaaS).

When the method of distribution changes, so do the traditional business models for software. We can therefore observe that the typical license model, which consists of an upfront payment and an annual maintenance fee, is gradually being supplemented or even replaced by subscription models.
Software by subscription? In principle this is no different from any other type of subscription. The end user pays regular recurring fees (monthly, quarterly, or annual) for access to software products which are automatically distributed to all subscribers as soon as they are published. Or the subscriber prepays to use on-demand services on an Internet-hosted server for a predefined period of time.

The concept of the subscription is of course not an invention of the software industry. It has long been known in the publishing and newspaper industry – to be exact, since the 17th century. According to Wikipedia (->www.wikipedia.org), subscriptions were originally introduced to facilitate the sales of works that were only of interest to a small, select group because of their specialized content, their artistic design, or even because of the planned size. The subscription was designed to help publishers find out in advance how high the demand would actually be so they could produce an edition that would at the very least cover their production costs. After all, as much as one likes to support science and the arts, multi-volume encyclopedias, scientific literature, or even copperplate prints must be produced in an economically efficient manner. 

Today's subscriptions have moved beyond the select circles of literary connoisseurs and are used to sell a wide variety of popular products and services. Subscription-based models are used everywhere, starting with the obvious newspapers and magazines, but also including book-of-the-month clubs, gym memberships, theaters and other cultural institutions, as well as internet providers, telephone and cable companies, pay TV services, or even the numerous social networking and special interest Internet sites such as XING or LinkedIn.

What is the special appeal of the subscription-based model that has made it so popular?
First, subscriptions don’t require a lot of effort from the subscriber. When the selected period expires, the subscription is usually renewed automatically; the fees for the new period are typically paid by pre-authorized charges to a credit card or debits to a bank account.

Which brings us to advantage number two: The vendor is guaranteed a constant inflow of revenue over the length of the subscription. Meaning the vendor can better plan its business and cut down on risks. When the customer is happy with the products and services, there is usually a great willingness to renew the subscription. This is called customer retention. Finally, a more personal relationship is forged between vendor and customer, forming a good foundation for personalized marketing activities. Needless to say, the chances of success here are far higher than with non-targeted, “okay, we tried” campaigns.

All these advantages have allowed the subscription business model to gain validity in the software industry. And then there is the topic of price structure. Subscriptions offer the chance to achieve a larger long-term inflow of cash than the customary upfront purchase of license models, as well as an opportunity to do away the maintenance contracts that are increasingly unpopular with users, who associate them with increased overhead costs. 

And speaking of the end users... It is extremely convenient for them to download upgrades or updates for their software, which ensures that they always have access to the latest technology.  When I use software, I don’t want to have an out-of-date version. So I either have to take care of getting the updates myself – or I can have them sent to me for direct download, which means I don't have to mess around with CDs or handbooks, and I can also pay immediately online.

The best examples are the security solutions offered by our clients F-Secure, Raxco, and PANDA Security. After all, we all know that the people who develop viruses are unbelievably creative. For this reason we need anti-virus programs that offer the latest pattern updates on an almost daily basis to recognize the behavior patterns of new viruses and protect our computers from unwanted intruders.

Always having the latest version, no unused licenses and overall lower investment and operating costs – these are all reasons as well for the constantly growing trend of renting software and the associated server infrastructure as an on-demand service and paying for it on a subscription basis. Our customers Visionapps and Open Exchange operate on such business models.  From the end user point of view, SaaS models are especially attractive because there are hardly any start-up costs. Rented software has greater scalability, meaning it can be adapted to increases or decreases in individual demand. Ergo, no money is wasted on licenses that no one uses. And the software is always up to date, even – or especially – with regard to security.

This much is clear: Software publishers are increasingly supplementing their traditional license models with subscription-based rental and subscription models. Not because it’s trendy. But because high customer retention rates, predictable cash inflow, and additional sources of revenue are increasingly important in these economically troubled times. The end users, on the other hand, appreciate the fact that they always have the latest software – at a lower purchase price which can be paid over a longer period of time. Advantages for vendors, advantages for users – the expression "win-win situation" was invented precisely for cases such as this!

Best Regards, Dr. Dietmar Waudig, COO asknet

Cellular phone?

Nowadays I hardly know what this thing is I carry around … a cell phone??? That’s what most people call them in California – elsewhere – I think it’s a mobile phone in the UK and the German nickname is a “handie”. (Also, BTW as an aside, is it, or is it not, geekie to wear them on your hip??? I know 10 years ago that was bad news. Now it seems more sociably acceptable … and I’m nervous, because that’s where mine is most of the time. Maybe I’ve become an old geek?)

Anyway, I want to tell you a story. Due to my professional career, the Lamvik household has always been pretty high tech. I’ll skip the details but let’s just say we were an early adopter of pumping broadband wireless around the house many years ago. So my youngest son Ryan, when he was about 11 yrs old, associated “wireless” with “cool and high tech”. So we’re at the shopping mall one day and he comes running to get me -- -> “ Dad – you’ve GOT to see this!!!” So I follow him over to a display where if you bought a certain amount of junk – you got a free TV. But, the TV was some 7 inch overstocked old-school clunker with the bunny ears antenna. I was quite puzzled at his excitement until he said: “Look Dad – WIRELESS TV!!!” And that’s when it hit me the perspective of 30 years difference, because to my generation, cable TV was the big breakthrough.

So now we sit here making VOIP calls from our laptop skype, jajah, etc, and I’m getting email and opening .pdf attachments on my “cell phone”.  So just like cable TV versus over-the-air TV can change a perspective, also now cell phone versus laptop is an interesting phenomenon. I carry a Blackberry 8820 and among other things, it can connect via WiFi, has GPS capabilities, has a media player, and can open most MS Office attachments. So do I even need two devices? (I can’t even imagine NOT having a laptop!)

So if one happens to be in the Electronic Software Download (ESD) space, what is the best strategy; configure for PCs, or configure for “smart phones”? We think asknet’s answer is the best … do it for BOTH!!!

The mobile handset numbers are staggering. Imagine, first, the installed base of about 900 Million personal computers. And remind yourself, these are mostly in the developed areas of North America, Western and Central Europe, Japan, Australia, etc…  Now, versus SCALE and GEOGRAPHY consider a current installed based of handsets of 3.514 BILLION. And consider the geographical implications of this …. 46 handsets are sold per minute in North America – but 94 every minute in Africa and (drum roll) APAC + India = 388 PER MINUTE. As common sense, in developing areas, why not go straight to WIRELESS. (makes sense doesn’t it?)

So back to ESD, we now look straight into the eye of a HUGE OPPORTUNITY. How cool would it be to serve this huge VOLUME MARKET, and also address EMERGING GEOGRAPHIES at the same time.  Answer - -> VERY cool.

So asknet, in partnership with an outstanding software publisher, F-Secure, has done it. You absolutely positively have to go directly to F-Secure Online-Shop and check this out. Now that smart phones are connected via high speed like EDGE or WiFi they are equally susceptible to the same type of attacks we worry about with PCs. And F-Secure has incredible platform support for multiple hardware products and mobile operating systems. And when you get ready to buy, the asknet system will allow you to purchase directly from your smart phone. Remember: Your customers are mobile. Sales occur where they are!

I’m rambling long here, but one more thing. It’s not just downloading applications FOR smart phones TO smart phones. In Japan, you do your shopping on the metro ride home. Select the software you want for your PC, and make the purchase from your 3G smart phone. Then (ready for this) the image of the barcode is delivered to your smart phone, and then when you come up from the underground, you walk into your local convenience store and hold your smart phone image above the scanner, then purchase via cash (Yen, in this example). Now you have your license key and get everything set up when you arrive at your apartment.

VERY long blog entry, sorry, but this emerging marketplace is AMAZING in terms of SIZE and GEOGRAPHIC REACH. I hope you buy an F-Secure product and also hope you keep a close eye on the developments in mobile eCommerce or mCommerce:

Best Regards, Bob Lamvik

your e-commerce site needs to be tied into your financial and inventory systems very closely, and the sales reporting needs to be very precise and timely, so that when you tally your daily, monthly, and quarterly sales, you know what you’re putting on your “top line” is right.  A highly integrated solution is obviously better than an “off the shelf” report for proper revenue recognition.

There is probably 10 or 20 other differences, but at blog school they taught me to keep it short (I didn’t really go to blog school…) If you want to dive deeper into this subject matter, please contact me, our sales team, or keep poking around our website. (sales@asknet.com , 415/352-2610)

PS – I’m not Tarzan trying to say … asknet – GOOD, everything else- BAD. The other site I compared to today would be good for a small business shipping products in a fixed geography. In fact, their “limited time promotion” methodology looks quite nice. So the point is not good vs. bad, I’m trying to show apples vs. oranges.

Thx, Bob