What Microsoft Got Right That JetBrains Didn’t

Blog postsrants, angry tweets, comment threads hundreds of items long — the user community has unleashed quite some emotion onto JetBrains after the company’s decision to change the pricing model for its desktop products to 100% subscription-based. The news seems to have made the day for Eclipse guys, and at least one other commercial IDE vendor, though.

Now, neither I nor the company I work for are paying customers of JetBrains [1], but having been in the Java development tools business ourselves for almost the same number of years, we own a lot of respect to its founders and employees for what they have accomplished to date, which has prompted me to write this post.

Speaking about business, my day job has revolved around marketing and selling software development tools and services for nearly two decades. But I have not written the previous statement in order to pretend being an expert in pricing models so as to authoritatively share my expert-ise with the readers. Instead, let me tell you how Microsoft converted me, as an ordinary person, to a paying Office customer with its subscription offering late last year.

I had been thinking about getting a copy of Office for home use for several years prior to that. [2] Problem is, at the time of me making the purchase decision we had at home a desktop PC and a laptop, plus a kid in the sixth grade — likely to require an own device for their studies sooner rather than later. Being subscription-averse, I probably would have bought Office 2010 Home & Student Family Pack (up to 3 PCs for about $250) if (a) it was available in my country, (b) I was not an Outlook addict (about $100 extra; $200 if I wanted it on the laptop too), and (c) I did not come across a Microsoft promotion for Office 365 Home subscriptions and did not do the math.

Cannot recall what the prices were back then, but suppose I was weighing my options today, and only needed Outlook on one of just two PCs. The total cost of a single-PC license for Office 2013 Home and Business and a single-PC license for Office 2013 Home and Student in the official Microsoft Russia store is 6.2x the cost of a 1-year Office 365 Home subscription that is good for up to five (5) PCs or Macs, five tablets, and five phones, includes the equivalent of $400 Office Professional (Word, Excel, PowerPoint, OneNote, Outlook, Access and Publisher), free technical support over chat/phone, and 1TB of OneDrive storage space for up to five users, compared to just 15GB for the perpetual licenses. No. Brainer. That. (Even though I don’t use OneDrive, so 1TB vs 15GB makes no difference to me.) [3]

This is where I think JetBrains went wrong. It completely overhauled the pricing and licensing models, but the costs remained more or less the same to customers that used to upgrade regularly, and went up quite a bit for those that only upgraded once in a while. And with that came the inconveniences of ensuring that license checks can take place technically on a regular basis and having to remember to update your credit card info with one more vendor.

If instead JetBrains left the perpetual licenses available for purchase, but made its Toolbox radically, incredibly cheaper over the course of at least a couple of years in comparison, and threw into the mix a couple of other incentives, such as access to hosted versions of its server products, I am sure there would have been more praise than backlash from the community. It could have put that offering front and center on its Web site and in promotional materials — it took me so much time to navigate to the one-time purchases page for Office that I started thinking Microsoft is no longer offering perpetual Office licenses in Russia. It even could have got away with raising substantially the prices of the perpetual licenses for new customers, especially if it grandfathered its existing customers by letting them upgrade at the old prices indefinitely or for several years.

I am sure JetBrains decison-makers also did their math. Maybe their marketing people believe in the "There is no bad PR" mantra. Time will tell.

Update: This post has sparked yet another discussion on Reddit.

1. That said, several colleagues of mine own personal IntellJ IDEA licenses that they use at work — permanent licenses that will be cut off upgrades next year, unless JetBrains’ bosses change their mind — so the place where I work is affected by the change to some extent.

2. Say what you want, OSS fans, but OpenOffice/LibreOffice/whatever do not cut it for me — at work I’ve bumped into compatibility issues more times than I dare to remember (most recently this summer, with the other editor using the latest version of LibreOffice). And do not even get me started on how paragrarh numbering works in OpenOffice.

3. Microsoft’s pricing and bundling vary by country. In its US store, the same cobmo costs just 3.6x more than an annual Office 365 Home subscription, which I think is still quite good, plus the subscription also includes 60 minutes of Skype-to-phones call time per user per month, whereas in Russia that is not the case.

This entry was posted on Sunday, September 6th, 2015 at 2:16 am and is filed under Business of Software. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.