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Is SaaS really the only viable (or "unicorn") business model? Do people not sell software licenses anymore? (In theory nothing prevents you from making your li

Is SaaS really the only viable (or "unicorn") business model? Do people not sell software licenses anymore? (In theory nothing prevents you from making your license require recurring payment as well)

tobmlt 6y ago
*Most who sell licenses seem to be moving their old stuff/cash-cow-behemoths/etc to saas as quickly (slowly) as possible. -certainly there are exceptions. Exceptions seem more likely with smaller older companies with different priorities.
indigochill 6y ago
I suspect it's the same reason game devs are hot for streaming. When the code only runs on machines you control, piracy becomes impossible. By contrast, trusting people to respect licenses on code on their computers is how piracy happens. In my opinion this is a feature, not a bug, but the business reason is clear for why all commercial software is moving towards the SaaS model.
- pault 6y ago
  How much game piracy happens these days? Since steam became such a good distribution platform and my internet connection got fast I haven’t even thought about pirating a game. AAA titles are expensive, but there aren’t a ton of them released every year, and downloading cracked installers is a huge security risk.
airstrike 6y ago
Recurring revenue is much more stable than license purchases and also less prone to piracy. Adobe's incredibly successful transition (from a share price perspective) is a testament to the value ascribed to recurring revenue models. In fact, companies that sell services with a recurring revenue component are generally seen as higher margin and more stable across industries. For instance, Aerospace & Defense companies that have a strong "Aftermarket" presence (which really means maintenance, spares, repairs, etc.) generally command higher valuations. The SaaS hype just takes this to the ultimate level. Digital services have very little costs (relative to their physical counterparts). Recurring digital revenue equates to mind-boggling numbers like Salesforce having >70% gross margins, which is probably the most prominent reason why Tech valuations have skyrocketed in the cloud era
- eru 6y ago
  In general I agree with you. However: > For instance, Aerospace & Defense companies that have a strong "Aftermarket" presence (which really means maintenance, spares, repairs, etc.) generally command higher valuations. Not sure whether that's a good example, because that might just be exploiting some weirdness in how government projects get funding approval, and might not be relevant to the wider (and software) world?
  - airstrike 6y ago
    A&D encompasses Commercial aerospace like OEMs and their suppliers which are unrelated to Defense spending. Another example are Automotive companies like heavy-duty vehicle parts manufacturers, which also benefit from higher Aftermarket exposure
    - eru 6y ago
      Yes, that's a better example! (I thought your initial point was good, just that the argument for it wasn't as strong as it could be.)
TeMPOraL 6y ago
Been a while since I saw a license without recurring payment, particularly for code components. B2B, all libraries I've dealt with were paid per-developer-seat-year.

Is SaaS really the only viable (or "unicorn") business model? Do people not sell software licenses anymore? (In theory nothing prevents you from making your license require recurring payment as well)

tobmlt 6y ago

*Most who sell licenses seem to be moving their old stuff/cash-cow-behemoths/etc to saas as quickly (slowly) as possible. -certainly there are exceptions. Exceptions seem more likely with smaller older companies with different priorities.

indigochill 6y ago

I suspect it's the same reason game devs are hot for streaming. When the code only runs on machines you control, piracy becomes impossible. By contrast, trusting people to respect licenses on code on their computers is how piracy happens. In my opinion this is a feature, not a bug, but the business reason is clear for why all commercial software is moving towards the SaaS model.

pault 6y ago
How much game piracy happens these days? Since steam became such a good distribution platform and my internet connection got fast I haven’t even thought about pirating a game. AAA titles are expensive, but there aren’t a ton of them released every year, and downloading cracked installers is a huge security risk.

airstrike 6y ago

Recurring revenue is much more stable than license purchases and also less prone to piracy. Adobe's incredibly successful transition (from a share price perspective) is a testament to the value ascribed to recurring revenue models. In fact, companies that sell services with a recurring revenue component are generally seen as higher margin and more stable across industries. For instance, Aerospace & Defense companies that have a strong "Aftermarket" presence (which really means maintenance, spares, repairs, etc.) generally command higher valuations. The SaaS hype just takes this to the ultimate level. Digital services have very little costs (relative to their physical counterparts). Recurring digital revenue equates to mind-boggling numbers like Salesforce having >70% gross margins, which is probably the most prominent reason why Tech valuations have skyrocketed in the cloud era

eru 6y ago
In general I agree with you. However: > For instance, Aerospace & Defense companies that have a strong "Aftermarket" presence (which really means maintenance, spares, repairs, etc.) generally command higher valuations. Not sure whether that's a good example, because that might just be exploiting some weirdness in how government projects get funding approval, and might not be relevant to the wider (and software) world?
- airstrike 6y ago
  A&D encompasses Commercial aerospace like OEMs and their suppliers which are unrelated to Defense spending. Another example are Automotive companies like heavy-duty vehicle parts manufacturers, which also benefit from higher Aftermarket exposure
  - eru 6y ago
    Yes, that's a better example! (I thought your initial point was good, just that the argument for it wasn't as strong as it could be.)

TeMPOraL 6y ago

Been a while since I saw a license without recurring payment, particularly for code components. B2B, all libraries I've dealt with were paid per-developer-seat-year.