Considering equipment leases have been around forever I feel like this is just a way to say "why yes, we do subscriptions as well!". The real takeaway here is it's not that subscribers (customers) want this. It's that Wall Street wants this because: investors. This is because deferred futures are great for smoothing and forecasting of revenue. Subscriptions are ultimately bad for the buyer because you pay more and get less in most situations. And then you have vendors offering subscriptions that literally have taken formerly perpetually sold product and wrapped it up in a subscription model with little to no value add. It's also given vendors a way to lock customers out of support and upgrades. I'm waiting for the pushback... People complain about it, but not as vocally as they should.
Microsoft’s upgrade cycles for Windows 10 are a big problem for many companies. Many places deferred PC upgrade cycles for 6-10 years because they didn’t need them.
Now they are stuck with an accelerated upgrade cycle and big capex.
With respect to other subscriptions, I think that you’ll see pushback. Adobe and Microsoft play hardball, which gets old quick.
I think it's more of a will this update cripple our 20yr old in house developed app that is crucial for the business that either we don't know how to maintain or lost the source no longer working on the latest windows.
Previous employer, we were on WinXP and compiling a/ VS2003. Upgrade to Win7 mostly effectively crippled VS2003 for reasons I don't know. This necessitated porting our very large (100s of Millions of LOC in C++ to at least VS2008) set of in-house libraries. It should on paper be trivial, but it was a firm wide effort that spanned 18 months. Why? Because someone sent the CEO an xlsx that he couldn't open. This was circa 2007-2008. We were forced to upgrade OS and compiler for the new Office version, but it trickled into a firm wide rebuild of all C++ code. Wasnt pretty or fun.
That would likely turn the 18 month upgrade effort into a 36 month upgrade effort that happens 5 years later.
Sometimes long upgrade cycles are great, but I suspect a yearly upgrade to the latest Visual Studio would have been a lot less painful. Fixing a few small issues is much easier than fixing many of them, and having to do it yearly both makes everyone better at doing it and better at avoiding the creation of such issues.
It’s not supported and isn’t reliable enough to be cost effective. Microsoft barely supports what they claim to support, its bad advice to do this unless you have no options at all.
Being accountable for upgrading about 250k devices, we found that 3-5% of devices with questionable support status failed, as compared to near zero for supported devices. That 3-5% is unpredictable and expensive to address.
You also have to remember that Windows 10 isn’t a thing, it’s a lifestyle. Windows 10 1803 went EOL last week, and there are devices that worked with 1803 that won’t work with new builds.
I worked for a fortune 500 manufacturing company not long ago (2-3 years). Their main ERP was running on an AS400 mainframe and multiple pseudo-linked applications that were recently (4 years ago) updated to run on Windows 7 (which took 7 years to complete).
> I’ve never understood why modern businesses have these deployment issues.
Not every business is a tech-first company. Plenty of huge companies have legacy systems in place that can't be pushed to Windows 10 with a simple update.
It's definitely a security issue in the sense they've explicitly reserved the right to change and redefine the data they collect from Windows 10 machines with each update while reserving the right to not state what data they're syphoning at any one point.
It is a little different than a lease in that there's spare capacity on your floor that you don't pay for until you use it. IBM has done this with mainframes forever, so it's not new either. But, there is some convenience in rolling in a full rack and paying as you consume.
"Subscriptions are ultimately bad for the buyer because you pay more and get less in most situations." - in efficient markets anything that is good for the supplier will eventually be also good for the customer. Companies compete for customers and if subscription makes one company more stable or cheaper to finance or whatever then there will be soon a competitor using this subscription advantage to offer a better/cheaper product.
Let me simplify this. If you were to lease a car the only way it ends up better for you as the lessee is if you can negotiate a residual value that's lower than the price you can sell the car at at time of lease expiration. In many cases, with cars, you can do that. Computers, not so much. And with software under the subscription model you have nothing to recoup at the end.
If you have some example of this working in the consumers favor feel free to share. But I've worked for vendors. The subscription model has never been an advantage or positive for the buyer. Not once.
This article is light on details but this doesn't seem to be the same thing as leasing as others here have said. This is more akin to offerings from HPE and IBM where you get a whole bunch of infrastructure, but then only pay for what you consume. It's Infrastructure as a Service, but in your own data centre.
Not sure how this translates to personal computing though - typically you're either using the whole computer or none of it. I guess you could get a whole bunch of desktops and then only pay for the 8 hours a day that you're using them? Doesn't quite have the same scalability benefits as you can get from the compute infrastructure.
It's the difference between paying for capacity and paying for consumption. Which is useful, it opens a variety of potential economies and options for both Dell and their customers.
Many customers are fine doing their own planning and dislike being billed after the fact. Charging for capacity is what they want. That is the common case now.
Many other customers resent bearing the risk of over-provisioning or under-provisioning. Charging for consumption solves that for them. That's what Dell is adding. It's not totally new to them, EMC have done something like this for some time now.
Disclosure: I work for Pivotal, which is part of the Dell EMC keiritsu.
I work in infrastructure... Nothing has changed here. This is leasing. Dell also has a division named Dell Financial Services that will lease or loan you the hardware.
I don't totally understand what they mean, the press-release-style article isn't very specific. But:
> Customers will now be able to use Dell’s hardware based on their consumption, as a service… For the consumption programs, customers pay for the amount of storage or computing power they use.
That part sounds different than an ordinary lease, yes? I'm not totally sure I understand what it is though... the hardware on-premise at the customer for their exclusive use? But somehow it's usage is metered?
Doesn't a lease mean that you take custody of the goods and return them at the end? IIUC this is much more like a service akin to cloud offerings. Who pays the power bill for the server(s) subscribed to? Is the subscription one-for-one with serial numbers? Or if you deactivate the server and activate it again later could you get a different one?
Maybe they'll do small volumes with subscriptions though? Now a smaller business may be able to rent/lease <$5k worth of hardware where in the past discounts were given for big data center orders?
Yep. But I don't think the Street is blind to this. They want it for their own good. Not that they think it's innovative. But it protects their investment as a recurring model vs having to deal with lumpy quarters and churn. It's easier to keep leasing, I mean subscribe to, and get locked in vs just switch vendors.
It would be a total Amazon power move for Dell to displace one of its customers' businesses by removing the middle-man in computer rental
(aka "cloud computing") businesss.
How does this make sense when you're dealing with a rapidly-depreciating asset? Many businesses seem to be using "subscription" as a veil for "payment plan", as they are not delivering a service or recurring good.
Seems like a tough sell, with Amazon offering their new Outposts product, which is also an onsite datacenter subscription model but also integrates seamlessly with AWS.
Dell is closely connected with VMware, which also integrates seamlessly with AWS. And Azure and GCP. Everyone has dived into the all-places, all-clouds pool to try and outmaneuver each other.
Disclosure: I work for Pivotal, we're being acquired by VMware.
