It’s undeniable that the software industry is moving to the cloud. And, as several major software vendors have recently noted, the days of boxed software are definitely numbered.

The transition has been a gradual one and, depending on which vendor you talk to, it will be a little longer still. Adobe has already cut the cord; the only way to get InDesign or Photoshop in the future will be through its Creative Cloud. Microsoft is offering software through both streams, but sees boxed software phasing out within a decade.

And really, there’s no longer much need to walk into a retailer and buy a (largely empty) box with a CD inside. The widespread availability of high-speed Internet has made the online purchase and download of software a more attractive option for most consumers. And businesses are already there too. Just think of the carbon saved, whether from the drive to the store, or shipping the boxes there in the first place. Since vendors aren’t likely to cut prices, moving distribution to the cloud also improves their margins.

There’s no doubt boxed software will soon be made obsolete by the cloud, and we should welcome that. There’s one big question that the software industry must answer though: what of licensing?

As we move to the cloud, we must continue to have freedom of choice on software licensing. Vendors are also talking about a shift to a pure software as a service (SaaS) model, which means subscription pricing, and having to pay again (usually annually) to keep using the software. Most boxed software is sold with a perpetual license; you can use it as long as you like.

Now, each model has its advantages. With SaaS, you get all updates and new editions released during the subscription period. With a perpetual license, you only get minor updates and patches. With SaaS, you can often access the applications on multiple PCs; with a perpetual license you’re usually limited to one machine. With perpetual licensing though, the software is yours forever. With SaaS, you need to keep paying to keep using it.

Microsoft is offering both models today with Office. You can purchase (and download from the cloud) a copy of Office 2013 for perpetual use on one machine, or you can buy a subscription to Office 365 for up to five computers for one year. Adobe, however, is now supporting only Creative Cloud, with subscriptions starting at $49.00/month for new purchasers (less if you just want one application).

At those sorts of prices, cloud software can get very expensive, very quickly. Moving to the cloud shouldn’t be viewed by vendors as a cash grab. They must offer licensing flexibility to purchasers, and keep software pricing flexible and affordable. And purchasers should carefully consider total cost of ownership before making any buying decision.

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  • gisabun

    You would figure thigs would be cheaper if you didn’t have to box, master, and ship software. after all, those 3 add to the cost [well still tiny if you buy one of the Adobe CS suites]. It is obviously a way to cut the amount of software piracy but will Adobe benefit. Say you took a suite at $50/month [$600/year]. Compare to buying a suite at [say $1500]. The latter is good indefinitely but eventually they may get the next or the version after at upgrade pricing [say $700]. So in the end the monthly subsacription could be more profitable but others may object to the new pricing scheme. Few with pirated copies or just regular users would buy a subacription because they know their copy works indefinitely [or until their version isn’t supported by a new OS].