Microsoft and Pricing

November 19, 2008

I saw a new story in Seattle Tech Report here that Microsoft is making is OneCare security service free. A short time later I came across Microsoft’s own news release about this pricing change here. Bundling or giving away services free is not a new idea in software. The notion is to give customers a taste and then sell them more has worked many times. In the Microsoft news release, the company says:

Windows Live OneCare will continue to be sold for Windows XP and Windows Vista at retail through June 30, 2009. Direct sales of OneCare will be gradually phased out when “Morro” becomes available. Regardless of their method of purchase, Microsoft will ensure that all current customers remain protected through the life of their subscriptions.

The marketing technique is little more than shareware or freeware with a catch.

Then I remembered that Microsoft was reducing prices for its Dynamics products. The prices for its cloud services for Exchange and SharePoint were quite competitive as well. Even the Zune, according to CNet news is getting new features and a lower price. You can read “Microsoft Chopping Zune Prices” here.

The question I asked myself, “Will Microsoft’s price cutting and no fee initiatives extend to Microsoft Fast enterprise search?” My hunch is that the Fast ESP search technology may become more affordable in the months ahead. Here’s my reasoning:

  • A number of high profile vendors have rolled out more robust content processing solutions that “snap in” to SharePoint. Examples range from Autonomy to Coveo to Exalead to  Interse to ISYS to dozens of other vendors. Companies who want to “work around” SharePoint search problems have an abundance of options. Microsoft Fast may have to use severe price cuts to keep customers from getting out of the corral
  • As the economic noose tightens on organizations, some vendors may offer a two-fer deal; that is, sign up now, get one year free and pay only for the second year. This approach may be quite appealing in some organizations. In fact, in a recent review of Google prices for the US government, one could easily conclude that Google is keeping this option available to its resellers. The idea is to get shelf space or the camel’s nose into the tent.
  • New players may be willing to install a proof of concept for little or no money. These upstarts may provide “good enough” solutions that allow an organization to solve a tough content processing problem without spending much money.

I see the present economic climate forcing some Darwinian actions and Microsoft Fast may have to move quickly or face escalating competition within the Microsoft ecosystem. After spending $1.2 billion for a Web part and a police raid, there may be some strategic pricing changes Redmond may have to consider to adapt to the present enterprise market for search and content processing. If you are a Microsoft champion, please, help me understand if my analysis is on track or off track. Use the comments section and bring along some facts, please. I have enough uninformed inputs from my pals Barry and Cyrus to last the winter.

Stephen Arnold, November 19, 2008


Comments are closed.

  • Archives

  • Recent Posts

  • Meta