Microsoft and a host of other software companies are trying to convince customers to buy software through subscription-like contracts. And the vast majority of them will fail according to Linux creator, Linus Torvalds.
"Everyone wants to go into this 'Let's not sell software. Let's license it,' but that's horrible," Torvalds said. "It is the most stupid thing because nobody wants it."
The subscription debate will likely emerge as one of the major flash points in the software industry. Although the exact terms vary, in most of these programs customers sign multiyear contracts that commit them to pay for new software on an ongoing basis.
Microsoft put an exclamation point on the movement when it announced a software assurance program, a licensing option under which corporate customers agree to purchase a steady stream of upgrades. The software giant also unveiled a subscription service in which customers rent software on an annual basis but don't get to keep it at the end of the contract.
These strategies are doomed to failure for a number of reasons, according to Torvalds. Companies want to charge too much, and consumers don't need to upgrade their software as fast as they used to. Besides, human nature also abhors a rental.
"There's one and only one reason (subscriptions) is the perfect kind of business to be in," he said. "It is an infinite revenue stream."
"I don't think (subscriptions) will go away, but they will be much more rare, and you can't gouge people." Although Microsoft charges more than many other companies, the software giant is one of the few that could succeed because of its large market share.
Torvalds, however, was keen not to be tagged a Microsoft basher. He acknowledged that companies need to be able to make money selling their products, and that Microsoft is more heavily receives scrutinised than others.
"Most of the technology companies are like this. The only outspoken one is Microsoft," he said.
"I'm one of the few people in technology that doesn't hate Bill Gates," Torvalds added later. "I think it is strange how much people don't like Bill Gates."
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