Are We Headed to Subscription-based Cloud Computing?

This week, an Adobe exec demonstrated a suite of cloud-based applications designed to run with a touch interface.  Adobe calls it the “Creative Cloud.”  Its strategy is to change from selling software in the box to selling software on a monthly subscription basis.  The exec said that Adobe expects half its sales to be subscription-based by 2015.

I’m a big proponent of subscriptions.  It doesn’t matter if it is a magazine or a renewable lease on a $100 million jet plane.  Customers tend to renew subscriptions without giving the process a lot of thought.  Thus subscriptions tend to guarantee an ongoing revenue stream without a lot of extra sales effort.  Most sales managers will tell you that it costs 4-5 times as much to get a new customer than it does to renew an old one.  One only has to look at the example set by Netflix to see what kind of success can be engendered by the subscription business model.

The touch interface will be a big driver for cloud-based software.  Cloud computing means that any device can easily connect to software or services, and that certainly includes tablets and phones, which are essentially touch-interface devices.  Further, there is a lot more touch-based technology coming.  If you haven’t seen the TV shows Hawaii Five-O, NCIS: LA or John King’s show on CNN, watch an episode or two just to see what gigenormous touch screens can bring to the party.  Also, Google “huge touch screens”.  You’ll find dozens of YouTube and other videos showing off these devices.

Finally, there is the reliability factor to consider.  A few minutes ago, while I was typing this blog entry, my computer inexplicably crashed – naturally, right before it was almost finished.  I had to copy the contents by hand, reboot my computer and re-enter the article.  Grrrrrr………………….    If I were in the Cloud, maybe I wouldn’t have to put up with that c–p.  I would happily pay a (reasonable) monthly subscription fee if I could be sure that I’d never again have to deal with another crash.

In addition, subscriptions could eliminate some cheaters.  I know a person who buys the latest version of a software package from Costco every year.  He installs it on his computer, registers it with the manufacturer and then returns it to Costco, taking advantage of Costco’s generous return policy!  Although I’m no expert on the subject, it seems to me that a lot of software piracy could be eliminated or at lest curtailed if one had to have a subscription, and the software was available only in the cloud.

In conclusion, I believe that subscription-based computing in the cloud will be a big deal, and that it will happen fast, certainly within the next five years.