Programs Are Programs
How To Make Money In the Software Business
by John Walker
June 14th, 1993
WORLD WAR FOUR
==============
In late 1989 I spent some time thinking about what was then called the
"emerging new world order", and began to rough out a think piece
titled "World War Four". I scribbled an introduction in January of
1990, but since I'd already discussed the gist of the message verbally
with just about everybody who was likely to read such a paper, I put
it aside and never completed it.
The essence of "World War Four" was the argument that amidst all the
optimism and triumph engendered by the collapse of communism--the end
of World War Three (the Cold War, 1945-1990), we were in all
likelihood at the threshold of World War Four (1990-????). World War
Three, a relatively bloodless war which nonetheless consumed far more
wealth than any of its predecessors, was about which economic and
political system was appropriate for large industrialised nations.
That's pretty much been settled now. World War Four was, I predicted,
going to be centred on the essential definition of a nation and the
appropriate size and scale of political entities. I went on to argue
that 45 years of bipolar confrontation had simply put a lid on these
issues, which have been at the heart of the overwhelming majority of
all modern wars, and that we were probably entering into an era where
borders were going to be redrawn all around the world.
Well, of course, if I'd finished the piece and managed to get it
published anywhere, I'd probably be spending all my time on the talk
shows as the Political Prophet of the Nineties, so it's just as well I
didn't. But I stand by my 1990 predictions, including the one that
there will be a serious secession movement by one or more states of
the U.S. before the end of this decade.
So what does this have to do with the title of *this* paper? Well,
nothing really other than the fact that I've put everything aside to
finish this paper because I have the feeling that if I don't it's
going to suffer the same awful fate as "World War Four"--namely come
true and be considered totally obvious before I get around to
predicting it. I've been developing the ideas in this paper over the
last 14 months--ever since the idea popped into my head during a
conversation with Bill Gates--and as I've explored it and thought
further it seems more and more compelling. I know for a fact that
Gates is thinking in this direction as well, because I asked him and
he said, "Yes". Until recently I didn't think, however, he had the
whole idea put together as cleanly as I did. Recent events make me
suspect he's way ahead of everybody.
As with "World War Four", I've discussed aspects of this with many of
you. Because I've tended to focus on one aspect or another of the
whole picture, and because my views have been evolving, in part due to
your valuable comments, I'd urge you to read this document anyway to
make sure you see how all the pieces fit together.
BACKGROUND--IS SOFTWARE A BUSINESS?
===================================
In a world where Microsoft is worth more than IBM, it's hard to
imagine that less than 10 years ago a substantial part of the
financial and venture capital community were skeptical of the
fundamental viability of the software business--in fact it was
fashionable to ask whether software was really a "business" at all, in
the conventional sense.
Certainly, in 1983 and 1984, one could point to Microsoft, Lotus, and
Ashton-Tate as profitable, rapidly growing companies, but rare was the
company which broadened an initial, seemingly random success into a
consistently successful product line. Further, a software company
seemed threatened from all sides--from piracy, from next-to-zero-price
competition, and from an unsettled distribution environment. Rarely
was software even mentioned in reviews of trade shows, and people like
me who argued that software drove hardware successes--that the Apple 2
was successful *because* of Visi-Calc and the IBM PC *because* of
Lotus 1-2-3 were considered more than a little daft.
And yet today, in a world where software companies post profit margins
unheard of in most legitimate businesses, the old doubt about the
viability of the software business remains, but in another guise. In
1983 they asked, "Can you really make money, long term, selling
software?". In 1993, they ask, "Can anybody other than Microsoft make
money, long term, selling software?".
This is not a facetious question; when company after company which
were once pillars of the industry: Ashton-Tate, Software Publishing,
Borland, one after another collapses, is gobbled up, or is on the
ropes against deadly price-cutting competition, one cannot help but
ask whether any software company can truly consider its position
secure as long as there is a well funded competitor willing to sell at
close to the marginal cost of goods in order to gain market share.
I believe we are in the midst of a fundamental shift in the way
software is distributed--a transformation in the relationship between
software vendors and their customers fully as significant as the
emergence of computer retailing, spurred by the nascent desktop
computer. Companies which anticipate this transition, who encourage
it and prepare to benefit from it, may find themselves in as
unassailable a market position as any company in this century--the
"natural monopolies" of the next.
IT'S A PROGRAM, STUPID
======================
How odd it is, that every day we use the word "program" to talk about
the products we create and sell in the software business, and also to
describe the information and entertainment we watch on the television
and hear on the radio. And even though the word "software" has become
commonly used to describe video cassettes, compact discs, and other
non-computer material, rarely do software executives see a link
between the "programs" they sell and the "programs" they watch. Many
managers in the computer software business, and most analysts who
follow it, came from a hardware or turnkey systems background; thus it
is inevitable that they often think of software as a product like a
television, rather than an ongoing service like the "programs" the
television delivers.
LET'S CRUNCH SOME NUMBERS
=========================
Okay, I'm going to jump way ahead of myself here in a brazen attempt
to grab your attention. If you agree with this analysis, I'm sure
you'll summon the strength to trudge through the more deliberate
development of the argument that follows.
It's 1997. You call up the 800 number to order another computer, and
after you've chosen between the Alpha-III and the Octium chip and the
15 and 30 gigabyte hard drive, the salesperson tells you that the
machine comes with the "Basic Package" of Windows NT, Word, Excel,
Access, Money, and Multimedia Producer, and asks if you'd like to turn
on any additional software at the time. You request Project,
Designer, and Visual C++, and they're enabled also. In any case,
you're told, "it's all on the CD-ROM, so you don't have to decide
right now".
The computer shows up, and you start using it. Late one night you
decide you really need the German language spelling checker add-on for
Word, so you put in the CD-ROM, call Microsoft's 800 number to order
it on your credit card, and get back the code you enter to turn it on
in your smart card. Or if your computer has a modem, you can do it
just by clicking the mouse.
Basic costs you $10 per month. "Premium" programs range from $.75 to
as much as $100 per month for exotic niche applications. Every month
you get your "Microsoft Bill" itemising everything you subscribe to
and what it costs. Most folks just have it paid automatically from
their credit card, generally 6 months at a time. If you don't pay,
you don't get the new authorisations for your smart card and the
program stops working. So you pay. Every now and then a new CD-ROM
shows up with all the latest updates and upgrades and new products,
each with its "try me, buy me!" demo you can run right away. As long
as you have Basic, the CD-ROMs come automatically in the mail every 3
months.
Now let's look into the other end of the binoculars; from Bill Gates'
chair rather than his customers'. Today, there more than 125 million
MS-DOS personal computers installed. Given the rapid adoption of
Windows and sustained high sales rate of new machines driven by price
performance improvements in new chips, I believe it conservative to
expect that 100 million Windows NT machines will be installed 4 years
from today, most equipped with CD-ROM, multimedia accessories, and
contemporary peripherals; some upgraded from current high-end MS-DOS
machines, but most new machines of the Pentium/Alpha generation and
their successors. Further, let us assume that Microsoft is
unsuccessful in selling *any* software other than the Basic set (I'm
sure you'll concede, based on Microsoft's new product success rate,
this assumption is conservative). Well, multiply it out. That's 100
million machines times US$10 per month times 12 months per year, and
the answer is: US$12 Billion-with-a-B-like-Bill per year of *automatic
recurring revenue* for which the marketing costs are essentially nil
and distribution margin is nonexistent since fulfillment is direct.
Now given an utterly reliable, competitively unassailable annual
revenue stream of US$12 billion per year, you can invest in
fundamental and applied research, technology development, new product
development, marketing, and launch at levels no other player can
approach. These investments translate directly into additional
recurring revenue to the extent the premium products are adopted by
the 100 million and growing installed base, and the proceeds fund
further development. In this environment, competitors are forced to
either cut prices (and thus their margins), or search for a genuine
technological edge and rush it to market before the folks who employ
more than 50% of the research people in the field stumble onto it.
DOES THIS SOUND FAMILIAR? 1
============================
Well, Walker's gone right off the deep end again, without even
bothering to fill the pool this time? Smart cards, CD-ROMs,
expiration of programs, blah, blah, blah. He's made up a whole fairy
castle industry out of thin air without the slightest proof that it
could even be viable.
And yet, there is something about it that seems oddly familiar....
Let's see.... Aha!!!
Programs are programs. So let's start by looking at what's on the
television. No, not the pap on the screen, what's *on* the
television--not the bloody penguin but the little black box the
penguin's standing on. Today, not far out in the distant 1997 I was
talking about, more than a hundred million people in Europe and North
America buy programs--television programs--on a monthly basis. They
buy them from a cable television operator or, if they live outside an
area with cable service or wish a wider selection, by subscription to
a satellite broadcasting system. (Satellite broadcasting still seems
a little exotic in the U.S., though that is rapidly changing with the
Hughes-Thomson-RCA DirecTV system; In Europe it's everywhere--it's
hard to find a home in Britain without an Astra dish--satellites work
better in Europe and Japan because they aren't as *big* as the U.S.--a
2 foot dish works just fine, and you can buy the whole rig for about
US$300). If you use a satellite dish, your receiver has a little slot
where you put in a smart card. If you decide, for example, to
subscribe to Turner All-Colourised Movies, just pick up the phone,
call the toll-free number, give your subscriber ID from the smartcard,
and zap-flash in 30 seconds you're watching Bogey in living -- well --
pasty colour. This technology is off-the-shelf stuff available in
every Radio Shack in the U.S. and any T.V. store in Europe.
Most cable television subscribers pay US$5 to US$10 per month for
Basic and monthly fees for Premium services like:
Low rent cable channels (A&E, BRAVO, etc.) US$0.79 - 1.00/month
Network packages (Denver 5 or Primetime 24) US$4.00 - 5.00/month
Premium Channels (Disney, HBO, TMC, etc.) US$7.00 - 10.00/month
and the typical satellite user (who receives all the channels included
in Basic cable for free) pays between US$150 and US$300 per year for
premium services. Of course there are ultra-premium niche services
such as real-time stock and commodity quotes, etc., for which one may
pay up to US$100 per month.
You do not *buy* your television programs, you *subscribe* to them,
and the revenue flows back through the chain to those who manufacture
them (have you noticed how often you see "An HBO Picture" in the
titles in the theatres?). And if folks pay $150 a year or more for
television programs, is it absurd to suppose they will pay $120 a year
for computer programs, especially when the cost is in little monthly
nibbles rather than $495 up-front the way we do it today, and when you
can always rationalise a purchase by saying, "Well, I can always
cancel it if I don't like it"?
I believe that soon we're not going to *buy* computer programs either,
we're going to *subscribe* to them. Programs are programs.
DOES THIS SOUND FAMILIAR? 2
============================
What companies stand out as the huge unassailable (for a while)
monoliths of this century? In the United States I'd list:
American Telephone & Telegraph 1875-1980
IBM 1930-1970
Xerox 1960-1970
Now consider that during the time that each of these companies was in
a position of total dominance of its market, it delivered its product,
which was fundamentally a piece of hardware, as a *service*, almost
entirely on a rental or subscription basis. This, combined with a
dominant market share obtained either by getting there first
(AT&T/Xerox) or by blowing away less-serious competitors with a
massive sales organisation (IBM in computers after 1948), largely
insulated the base revenue stream of these companies from business
cycles and competitive threats. The annuity-like revenue base, in
turn, allowed them to make large, long-term investments in technology
relevant to their business (Bell Labs, IBM Research Labs, Xerox PARC)
and in product development aimed at further distancing them from their
competitors.
Note that in each of these cases the subscription/rental nature of the
revenue stream allowed these companies to subordinate technological
progress to the needs of the business. Unlike a free-for-all like
today's RAM chip or hard disc market, where product generation times
are measured in months, AT&T could introduce direct dialing, direct
long distance dialing, electronic switching systems, etc. on a
decades-long plan geared to optimising their profits. IBM was not
forced to rush out the 7094 or 360 under the gun by competitive
fears--they could switch their rental base to a new generation at a
time of IBM's choosing, when the technology was ripe to increase their
revenues and earnings. In short, when a company achieves a stable
subscription base, *it* calls the technological shots in the market.
Of course if a company is complacent, it will eventually be knocked
out, but you have to be awfully complacent and/or incompetent to
nullify the benefit of a 10 to 1 advantage in product development and
marketing resources (Xerox, of course, demonstrates that it *can* be
done, but in the other cases it took government action or fear of
government action to displace the dominant player).
DOES THIS SOUND FAMILIAR? 3
============================
Redmond, Washington, March 20, 1992. Transcript of meeting of John
Walker and John Forbes of Autodesk and Bill Gates and Todd Needham of
Microsoft.
WALKER: So let me see if I understand where you're going with
this, Bill. What you'd really like is if in, say,
five years, everybody with a computer gets a
Microsoft bill every month, just like a telephone
bill, for each product they use.
GATES: Precisely.
DOES THIS SOUND FAMILIAR? 4
============================
Have you heard of the "Microsoft Developer Network"? I'm a member.
Walk around and ask random programmers if they are as well (either
company-paid or on their own account). There are 45,000 members as of
the last time I looked, and I suspect the ranks are swelling rapidly.
If you're a remotely serious Windows developer, you simply cannot
afford not to join, because it's the only effective way to receive
massive amounts of source code, internal technical documentation, beta
copies of soon to be released Microsoft products, special development,
debugging, and authoring tools, etc., etc.
How does it work? Well, it's a, er, *subscription*. I mail in a
check for US$200 per year, and every 90 days they send me this, er,
CD-ROM filled with 600 megabytes of ever-changing goodies. And as
long as my subscription is current, the bits just keep on coming.
DOES THIS SOUND FAMILIAR? 5
============================
Have you noticed how Microsoft update marketing works these days?
They've pretty much dropped even the pretense of running updates
through the distribution channel except for mega-million blowouts like
Windows 3.1 or DOS 6. No, as long as you've registered the product,
right about the time the new release hits the cover of PC World, a
little letter from Bill shows up with their little blue OCR form. You
just tick the box and attach your check or credit card number for a
readily-digestible fee (usually US$30 through US$150) and bung it in
the post. A week later the update shows up at your door. For those
who update faithfully this way (and I won't get into the many ways
Microsoft forces you to stay current or pay a heavy price--they're
masters at it), this amounts almost to a subscription--not on a
consolidated basis like cable or satellite TV, but to a product, like
a magazine subscription. And the economic dynamics strongly resemble
those of magazine subscriptions.
Magazine subscriptions are typically sold through retail channels
and/or highly discounted for an initial subscription; publishers don't
usually make money on initial subscriptions. Renewals, however, are
handled by direct marketing and all the recurring revenue for the
subsequent years goes right into the publisher's pocket. It's the
same for Microsoft Word; Gates has every incentive to discount initial
sales of Word as much as possible to gain market share against Word
Perfect, and to grant all kinds of incentives to his channels as long
as he believes that each initial sale plugs him into a virtually
guaranteed revenue stream of, say, $50 per copy per year. Of course
to realise that revenue he has to keep the updates coming and provide
enough added value in each one so people continue to stay current.
But since I've never seen a wish list get shorter for any software
product I've worked on, I hardly think that's a problem as long as
you're willing to invest in development.
DOES THIS SOUND FAMILIAR? 6
============================
Microsoft, 2 Cable Giants Weigh Interactive TV Venture
By John Markoff
New York Times Service
International Herald Tribune, Monday, June 14, 1993
NEW YORK--Three dominant technology and entertainment
companies are on the verge of joining forces to create the
equivalent of software for cable television--a system that
would combine the worlds of computing and television and
perhaps shape how much of popular culture is delivered.
Time Warner Inc., the largest entertainment company,
Tele-Communications Inc., the largest cable television
company, and Microsoft Corp., the largest software company
are expected to announce by the end of the month that they
will form a company, tentatively called Cablesoft. The
companies hope the new venture will lead the way in
establishing a standard for the transmission of a coming
generation of interactive programs.
At stake is control of the unobtrusive cable box that sits
atop many television sets. In recent months the box has
become a battleground for computer, telephone, and cable
companies.
...
Last month, for example, Intel Corp., the world's largest
chipmaker, Microsoft, and General Instrument Corp. announced
plans to develop a cable converter that would have a built-in
personal computer. Last Monday Time Warner announced that
Silicon Graphics Inc., a Silicon Valley computer maker, and
Scientific Atlanta, a supplier of cable boxes, would supply
hardware and software for its digital television trial in
Orlando, Florida, which is scheduled for next year. A day
before that announcement, Kaleida, a joint venture of IBM and
Apple Computer, said it was joining with Motorola Inc. and
Scientific Atlanta to develop a similar futuristic television
controller.
...
Need I point out that just as soon as your cable box talks to your
computer in almost any fashion whatsoever, the technological means
exist to make subscription software as secure as subscription
television. And the pirate TV decoder business seems to have been
roundly wiped out.
The Time Warner/Tele-Communications/Microsoft deal is, of course,
something that's looking out a few years and probably genuinely
focused on interactive television. But purely as a side effect,
something that just falls out, is the means to distribute and
authorise subscription software world-wide. Controlled by Microsoft.
This could have implications outside the entertainment world.
GETTING THERE
=============
Ever since 1985 when I first I proposed the "AutoCAD Professional
Subscription" as a means of finding the holy grail of recurring
revenue, I have been following the evolution of the software business
from a retail sales model to a subscription/service base. When I look
at the convergence of the trends and events I've noted above, I cannot
help but believe we are, if not already in that era, at least on its
threshold.
Emerging from this period of transition with a large, stable, and
growing subscription base will render the companies who succeed
formidable, almost invincible, competitors compared to firms with
smaller market share forced to generate their revenue entirely from
new sales. Reinvestment of a stable revenue base can, if done wisely,
further widen the gap between the dominant firm and the dwarves.
For some reason, when I discuss the subscription model of software
distribution, many people get confused and think I'm talking about
something in the medium to far future--"Well, yes, things may indeed
go that way once we have interactive television/fiber to the home/data
highway/..., but for now....". But other than the Microsoft cable box
venture, which is interesting but unnecessary, nothing I have
discussed has any technological contents whatsoever; it is purely a
question of marketing and distribution strategy. Bucks, not Buck
Rogers.
To summarise and demonstrate that all the foundation pieces exist:
* Tens of thousands of people pay Microsoft $200 a year to
subscribe to Developer Network and receive a CD-ROM every
90 days.
* Silicon Graphics distributes all its software to every
customer on regularly-issued CD-ROMs. You purchase an
authorisation code to install and enable it.
* Microsoft does direct marketing and fulfillment of most
updates of current products.
* More than 50 million cable television subscribers pay
US$100 per year, some far more, for their television
programs.
Unlike many major transitions in distribution strategies, moving
toward a subscription model can be done, as far as I can tell, with
little or no risk (effort and expense, yes; risk, no). In a business
which concentrates primarily on new sales, the installed base is often
an underperforming asset waiting to be discovered. Moving to direct
marketing of "frequent, cheap" updates and upgrades, as Microsoft has
done, is unlikely to alienate existing channels geared to selling new
products. As Autodesk has discovered, as long as we keep new sales of
AutoCAD firmly in the dealer channel, providing direct options for
"the little stuff" may provoke grumbling, but seldom more grumbling
than we hear about "unprofitable, time wasting update business".
I believe a subscription strategy can be evaluated and planned
relatively simply once we discover the answer to the following
question:
How much revenue do we generate, per annum, from the average
unit of AutoCAD, after its sale?
Now, I don't have the vaguest idea of this number, but let's play a
little napkin engineering and make a wild stab. The wild and wooly
R12 update generated $22 million in update revenue and the subsequent
quarter $13.5 million (Pru-Bache report, May 24, 1993). Let's assume
we hold the $13.5 million level (which Laura and folks don't expect,
but I want to err on the high side). So we have $63 million in update
revenue, liberally construed, in a year with a blockbuster update.
Folding the napkin and continuing, we have about a million installed
copies, but let's say they're, oh, 700,000 "active" copies,
disregarding shelfware and people who haven't upgraded since Version
2.6. Well, that comes out to about US$90 per year per "active" copy.
So, for example, if we could get half our "active" users to subscribe
for, say US$250 per year, we would have a recurring revenue stream
greater than our biggest update year ever, and without all the push
and cost it takes us to launch an update. And given what Autodesk
usually charges for updates, many users would probably consider this a
bargain, particularly if it avoided all the hassle currently involved
in updating a copy of AutoCAD.
It's also intriguing to divide the Pru-Bache FY 94 estimate of US$430
million by my "active base" of 700,000. That comes out to US$614 per
active unit per year. So were we, for example, to move to a
subscription for AutoCAD of about $100 per month for new sales, we
would generate, month after month, year after year, revenue equal to
what we largely derive today only from new sales--again assuming only
50% conversion of the already active base. This implies a more
radical change in the way we do business which could be deferred until
experience with the installed base upgrade/update program confirmed
its viability, or simply put off forever, retaining different channels
for first sale and subscription as in the magazine business and
Microsoft's current practice.
THE ENABLING PREREQUISITE
=========================
If you've made it all the way through my arguments without either
getting lost in my thorny prose or storming away in violent
disagreement with my premises or deductions, you may be beginning to
think I'm onto something here. But that raises the legitimate
question, "Well, if even Walker's figured it out, why isn't everybody
in the industry already doing it?". Indeed, I've wondered quite a bit
about that myself.
I think the answer lies in the observation that most companies who
succeed in building self-sustaining subscription-based businesses
start from a position of effective monopoly of their sector. In the
case of AT&T, it was a combination of technology, patents, and
government grants which conferred the monopoly. IBM built its first
monopoly in tabulating equipment on the patent of the Hollerith card,
then clawed its way to an effective monopoly in computers by out
marketing and out-customer-servicing Remington Rand, Burroughs, and
others. Xerox derived its monopoly from the patent on xerography.
Quite simply, to derive enough revenue from a subscription strategy to
make the business run, you have to have the lion's share of the
market, not a small slice. To get people to subscribe, you have to
have demonstrated technological leadership that convinces them they'll
get more value by paying you regularly than buying from somebody else
outright, then replacing the product later on. And of course the
central development engine needs to be big enough to keep generating
the value that gives subscribers value for their money, year in and
year out.
Which means that to pull off the transition to a subscription base,
you have to start with a large market share lead, and therefore the
only companies in the software business well-positioned to do this
today are:
Microsoft
Autodesk (in CAD)
Word Perfect (in word processing, but slipping)
Lotus (in spreadsheets, perhaps, and slipping quickly)
SUMMARY AND CONCLUSION
======================
Is software a business? Can a company make money selling software,
consistently and reliably? In 1983 many people doubted that these
statements were true. In 1993, we have one great success story but
little confidence that other sectors and companies are safe
investments for the long term with predictable chances for growth.
By 2003, I believe that everybody will know the answers to these
questions: "Yes, and yes". Within 10 years the software industry will
have restructured itself from a costly and unpredictable
bookstore/appliance dealer sale-oriented model to a cable TV-like
subscription model. The companies who emerge from the turbulence of
this transition will be the colossi of the industry, no more and no
less inherently risky than television networks, book publishers, or
regional telephone companies. Their revenues, measured in the
billions to tens of billions will fund ongoing product development
aimed and increasing their subscription base.
Ironically, they may cease to be viewed as "growth stocks"--once the
constant revenue base comes to eclipse the near-term potential of a
new product launches, their performance may appeal to those who buy
utility stocks today. (But then when electricity use was growing
exponentially in the early '50s, utilities were "growth stocks".)
It's 2003. The little black box on the top of the TV is hardly big
enough to hold all the logos printed on it: Microsoft, Time-Warner,
Swiss PTT, SES/ASTRA, General Instrument, Dolby Labs, Intel,
Motorola/Iridium, etc. A couple of wires hook it to the TV and the
computer, and the ubiquitous smart card sticks out the front. Every
month I get a bill for the programs I subscribe to:
Astra Basic pack 2.00
Eutelsat Basic pack 2.00
HBO 7.00
The Dinosaur Channel 0.50
Canal Plus 1.25
TeleCine Romande 4.00
CNN International 0.75
Microsoft Basic pack 4.00
Microsoft Developer Network 10.00
Microsoft Project 2.00
Microsoft Visual C+++++ 9.00
Microsoft Producer 4.00
Autodesk AutoCAD 75.00
Autodesk Cyberspace Explorer 8.00
EuroFeed Internet News Link 1.00
BBC World Service Radio 0.25
... about 20 more ...programs are programs
And since the bill gets paid automatically, and it's only about 200
francs a month, I don't look at it too closely (other than that
AutoCAD thang--wonder if they'll *ever* give me a break!). Each
little nibble is so small, though, compared to when I had to shell out
US$400 over the counter for some software I didn't know would even
work when I installed it, that I pay and pay and pay.
This document is a work of education, not advocacy. I believe that
wisdom consists of embracing change, not battling it. We win by
enlisting the slow but inevitable forces of economics on our side, not
by shoveling sand to halt the tide. All the evidence I can see
convinces me the software business is finally making the transition to
a recurring revenue model which will be its salvation. This
transition will entrench those companies who leverage their large
existing market share into a consistent and reliable base of recurring
subscription revenue.
Among major software companies, Microsoft and Autodesk (in the CAD
sector) are uniquely positioned to lead this transition and benefit
from it.