« Live Services != OS | Main | Client Software as a Service »

November 03, 2005


Ross Mayfield


Kevin Tunis

With Scoble talking about SaaS and all the other stuff I have been seeing this week, I just had to chime in. My company Knowledge Mgmt. Solutions, Inc. has been offering Microsoft software since 2000 in which we sign a SPLA agreement and the next year in 2001, we sign an agreement for Passport with the idea to use Passport as a secure means to access Microsoft software in a web-based solution. In response to Sam Ramji's post he talks about launching a SaaS Empower program; this I would very much be interested in discussing further. For instance, we are offering a dedicated server for 71.00 USD per month and under the SPLA program we are offering Visual Studio for 51.88 USD per month per user, this allows small to medium developer companies to use the full capabilities of Visual Studio for the time of the project that they are working on without having to purchase the retail version and allocate pricing for that expense - this takes total cost of ownership to a zero cost of ownership. This is a breakdown of the 51.88 as we have to license it, for Windows Standard Edition Server 3.60 USD, for Windows Terminal Server 3.29 and for Visual Studio Enterprise Edition 44.99, we than add a percent on this for managed hosting in a shared environment; but if customer leases a server we then set up the server to allocate which user is what offering whether it's Office, Exchange, Project or any of the other software offered at Microsoft. Even at the end of last week, we were discussing this with Microsoft and the upcoming Microsoft Solution for Applications as a means for deploying, managing and provisions sites for service providers, hosters and business. Shoot, for that matter if we could actual find a team within Microsoft that does this now and would work with us - send us a check, restructure the licensing and we can get this up and running within the next 6 months. I would very much like to hear from other service providers, hosters, businesses and developers as next week we begin discussing licenses with Microsoft for these offerings. You can contact me at kevin@knowledgemgmtsolutions.com of call my cell at 620-272-3927.


For us, it's not a question of how to get us to move *to* the Windows stack, it's how to stop us from moving *from* the Windows stack to the linux stack.

We have a nearly feature complete ASP.NET 2.0 implementation of our product. We believe that the Windows stack offers lower TCO, higher security, and faster development time than the linux stack. And we estimate that switching to linux would set us back at least six months and involve significant technological risk.

So why are we even considering moving to linux?

Because there is no Empower for SaaS.

Lower TCO and better security are irrelevant if the cost of provisioning our server racks shuts the company down before we ever go live. We have to provision our server racks before we launch, and that means we are building racks pre-revenue. Every dollar of spending we can defer until we after have revenue is worth its weight in gold. On a risk adjusted, time value of money basis, the additional upfront investment required to provision our racks with the Windows stack dwarfs any possible future TCO differential. We are forced to launch on the linux stack even though in the long run it's a terrible decision and once we're live we can't switch back.

The Empower program is brilliant. Help startups defer their technology licensing costs if they launch on and using Microsoft platforms. It's a classic win-win strategy. It just happens to be built around an outdated business model.

The startup cost of a traditional ISV was largely determined by the software development cost, so traditional ISV's needed to be able to defer their development software licensing costs. The startup cost for SaaS is completely different. What matters to the SaaS startup is the server launch costs. Everything you talked about in your post sounds great, but what we need is a way to defer the licensing costs that are relevant to the SaaS startup. We need a way to defer the cost of the licenses that run on our go-live servers for, say, the first two years (allowing one year of free public "beta" marketing campaign and one year of revenue generation to be able to afford all those licenses).

Empower is already providing this type of win/win deferment of licensing costs, it's just defering cost of licensing a different set of SKUs. Sure, MS would lose some licensing revenue from an SaaS startup during those first two years just like it loses some revenue from traditional Empower ISVs during their early days. But is that really worse than losing the licensing revenue from that same SaaS startup forever?

We designed AND built our application to run on the Windows stack. Now we want to release it on the Windows stack. But we can't do that without someone who can bring about a version of Empower that is relevant to a SaaS launch


I tried to send you some feedback (via email), but it was rejected by your spam filters. If you have any suggestions, please let me know.

The comments to this entry are closed.

My Photo
Difference Engineer: I donated to the Ada Initiative

Donate to the Ada Initiative’s Seed 100 campaign to support women in open technology and culture!

When we win it's with small things,
and the triumph itself makes us small.
What is extraordinary and eternal
does not want to be bent by us.
I mean the Angel who appeared
to the wrestlers of the Old Testament:
when the wrestler's sinews
grew long like metal strings,
he felt them under his fingers
like chords of deep music.

Whoever was beaten by this Angel
(who often simply declined the fight)
went away proud and strengthened
and great from that harsh hand,
that kneaded him as if to change his shape.
Winning does not tempt that man.
This is how he grows: by being defeated, decisively,
by constantly greater beings.

Rainer Maria Rilke