You may have seen the news that Adobe announced the Adobe Creative Cloud and that they are going all-in on a subscription pricing model (see “Adobe Goes All-In On Subscription Pricing Model“, “Adobe Kills Creative Suite, Goes Subscription Only” and “Adobe CEO: The Truth About Creative Cloud” for more details). This is certainly interesting news and confirms what we’ve been seeing in the market and our research confirms – the move to subscription and usage-based licensing models is real and gaining speed.
Unfortunately, as is often the case, the discussion about software licensing models often gets confused with the deployment model. In this case, Adobe has decided to only offer the product with a subscription licensing model. You can no longer purchase it via a perpetual license model. This decision does not directly have anything to do with how the software is deployed and delivered. If you read into the details of the story, the software is now a hybrid deployment with both a local client application with cloud services as well. In fact, the CEO comments that you can use the product just fine in a disconnected mode where you have no internet connectivity. Even by their choice of name, Adobe Creative Cloud, Adobe has added a bit to the confusion as this suggests this is a fully cloud-based, software as a service (SaaS) product, which it is not.
We continue to see growing adoption of subscription licensing models for both on-premises and on-demand (cloud or SaaS if you prefer) applications. Subscription licensing models are both viable and available for any type of software, including on-premises, on an increasing basis. The only thing that does seem to be an absolute it that once a company has chosen to offer its product as a SaaS or on-demand service, it almost always does so via a subscription vs. perpetual model to more closely align revenue with ongoing operational costs associated with delivering the service.
I suspect you will continue to see more and more vendors moving this direction – adopting subscription and usage-based licensing models. The market is demanding it and vendors are responding. They are also demanding more cloud-based offerings as well which is why we continue to see many established companies acquiring cloud-based applications. But keep in mind that the software licensing model and delivery model are two separate things that may or may not be related – and each offers their own benefits to both application producers and their customers.
For more information on subscription and usage-based models, please read: