Subscription pricing gathers steam

Sun Microsystems has netted some 330,000 customers – including 40,000 in Australia -- for its subscription pricing since launching the innovative utility computing-style model for its Java Enterprise System software in March.

Laurie Wong, desktop products business manager at Sun Australia, said subscription pricing was “certainly” gaining traction, mainly with larger enterprises. Increasing numbers of customers were opting for subscription pricing.

Subscription pricing entails paying a set amount per employee per year instead of paying for the software by CPU.

“We've got a lot [of customers] in the pipeline. Customers like the pricing, they like the software but they do have to run proof-of-concept to make sure that the applications can run across it,” Wong said.

“And I believe it's getting a lot of traction on Wall Street.”

Telecommunications giants Telstra and Telecom New Zealand were good examples, he said, but Sun had also signed up a number of SMBs to the plan.

Sun had experienced few if any hiccups with the new pricing system. However, there could be problems deciding who was and who was not officially an employee for the purposes of subscription pricing, Wong said.

“That's something we're very flexible with,” he added. “But certainly it alerts us to the fact that we might need a bit more granularity in terms of [defining] the enterprise.”

Sun was offering subscription pricing on its new Solaris 10 operating system, which ships globally in January, Wong said.

Solaris 10 would thus essentially be free to the customer, with all the money made from maintenance and support for Sun and its resellers, he said.

Subscription pricing for software differed from application service provision (ASP) in that ASP customers consumed a service and paid for the consumption of that service, Wong said.

Eventually, hardware also would probably be offered on a subscription pricing basis, he said.

“Instead of buying large amounts of CPU to cope with peaks [in demand], you just buy it at $1 per CPU hour and charge it on the basis of how many CPU hours you use,” Wong said. “It's a more optimum model for peak requirements.”

However, market analyst Gartner Group has said that the drive towards utility computing could cost many IT sector jobs, due in part to increased IT infrastructure automation.