If there’s one thing Microsoft has learned from their venture into home videogame consoles (via the Xbox), it’s that you can make billions by losing millions. It’s been estimated that the original Xbox cost Microsoft $323 in materials alone (that doesn’t include labor and packaging) and retailed for $299. That tradition has carried over to the Xbox 360, which experts estimate Microsoft loses $126 per unit sold (and that’s pre-assembly). Microsoft doesn’t do this simply to cause headaches for Sony and Nintendo (although they could afford to). They do it because they get their returns in different ways. While the company makes back some of its money through game sales, and even more through licensing, its largest source of incoming is Xbox Live, Microsoft’s online service which allows gamers to play against one another online. An Xbox Live Gold Subscription, which will set you back $50/year, allows gamers to play online, leave feedback, participate in tournaments … you know, all the stuff you could do on the PS2 for free — although don’t be fooled, Sony has announced their new online system (rumored to be called “The HUB”) will be subscription based as well. And why not? There’s simply too much money to be made with this business model.
In the business world, if something makes you money you keep doing it — trust me, it’s the only possible explanation for Police Academy 7. Microsoft took a financial beating up front on both of their videogame consoles, only to watch the profits come rolling in with their subscription-based services. It’s worked so well that Microsoft would like to introduce you to their latest product, Office Live.
While even most small businesses have LANs (Local Area Networks), not all business have WANs (Wide Area Networks). That’s where Office Live comes in. With Live Collaboration, you’ll be able to store your business’ data on Microsoft’s servers to make “sharing it” (but with whom? heh) simpler. Live Collaboration will cost users $29.95 monthly. Microsoft is also rolling out Live Essentials, another application which gives its users “a Web site as well as collaboration and storage tools.” You guessed it — Live Essentials is an additional $29.95 per month.
As far as Microsoft it concerned, it’s a perfect business model. It wouldn’t surprise me to see these products available free for download, as they’re basically useless without the monthly subscriptions. The new enterprise edition of MS Office includes Groove, which will allow users to share their Word, Excel, Access and Powerpoint files either via their own Groove server or Microsoft’s own Groove hosting package ($79.95/yearly fee). And of course, Microsoft has mentioned that each PC accessing these new Office servers weill require its own license as well.
There’s no doubt monthly fees are Microsoft’s front line defense against pirates. How long will it be before Windows requires an Internet connection once a month to “check your license” before booting? If the world’s online porn industry can somehow manage to put together an age verification check, surely Microsoft cannot be to far behind with a system that checks the validity of your Windows installation every time you venture online.
Of course, for this model to really fly, the first thing Microsoft will have to do is convince the general public that storing their company’s data offsite on Microsoft owned servers is a good idea. The only thing worse than no backup is the false sense of security a backup provides. At least with my own backups, I know if I’m doing them, how frequently I’m doing them, and who (both virtually and physically) has access to the data. When a computer tech promises not to look at your personal files while fixing your computer, he means “until you leave.” “I promise ma’am, I will not go through yor digital photo directory … until you leave.” Ask anyone from your average computer user to the techie in your life what they think of the security and stability of Microsoft’s products. How many Tuesday nights have I spent patching computers? How many documents have I lost because of the infamous blue screen of death? And now I’m going to turn my company’s data over to you? Who exactly thinks this is a good idea?