What's Wrong With Software Licensing Models?

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Red Hat aims to further disrupt the traditional software space, this time attacking traditional licensing models. At the company’s recent Summit in Boston, executives pointed out the expenses incurred around a traditional license.

’Many companies sell you a license, and then they sell you a maintenance fee. Every year they sell you a maintenance fee. [If] you want to upgrade to another version, [they say], 'Well, let’s go back to the licensing fee.' That’s the business model that they have,’ said Red Hat Vice President of Customer Experience and Engagement Marco Bill-Peter.

’Our business model is different. It’s open source, and it’s around a subscription,’ he said.

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Bill-Peter said the benefits of the subscription model include ’mature open-source software,’ global support, certified security, certifications and globalization.

Bill-Peter compared Red Hat’s service model to a cellphone subscription, noting that it’s not quite as simple with software, but both guarantee a level of customer service to prevent customers from leaving at the end of a subscription period.