By charging developers 30% to host their iOS apps at the iPhone/iPad online store, Apple drove down the prices. In days of the nearest equivalent, apps for Palm Pilots were priced typically $10 to $25 under a 0% service fee; with the 30% charge, Apple drove down prices to a tenth of the former level.
(There is the myth that iOS apps are more profitable than Android ones. A recent analysis shows, however, that the number of free apps at Apple's online store rose over the years, and now is at 95% as developers look for revenue sources that avoid the 30% tax: in-app advertising and in-app sales. When 99-cent apps are added in, the percentage rises to 98%. We Android users welcome iOS users to the land of the free!)
As revenue models change in one market, they change in another. In recent years we saw CAD vendors begging customers to pay full price + pay annually, instead of the old model of pay full price + pay upgrades. It seems that about half of CAD users have fallen for the pay-every-year model.
A few CAD vendors introduced rentals, where users pay a lot more for short-term use, but rentals do not appear popular. Even fewer vendors offer the base software free, and then hope to make money through add-ons or upgrades.
England's Electrocomponents last month introduced another pricing model: free, with money mande on selling hardware parts. The company's two brands -- RS Components and Allied Electronics -- sell three million different products for electronics and maintenance. To make their part sales more popular, they are giving away a stripped-down version of SpaceClaim.
Well, the idea is not so new, for it appears that Electrocomponents copied some elements of the Dassault Tactic: attack a competitor by licencing some commercial software free and have the community provide support. (In Dassault's case, they licensed ARES from Graebert, and to attack AutoCAD provide it free under the name of DraftSight.)
The British company last week announced 50,000 downloads in the first two weeks to 150 countries. The company describes the number of downloads as a sign of urgency among engineers "for freely accessible, time saving design
tools." Said the press release:
Mark Cundle, global head of technical marketing at RS, said, "If there was ever any doubt about the potential demand for a free 3D design tool, these staggering initial uptake figures are more than proof that engineers in every part of the world are hungry for tools that make it faster and easier to complete the design process and get their products to market.
"The simplicity and affordability of DesignSpark Mechanical opens up 3D design to a much wider engineering base and creates a level playing field for companies of all sizes to compete."
Affordable to end-users, but not to Electrocomponents, because there are royalty payments involved, and not just to SpaceClaim. Nearly all CAD software uses technology licensed from others, such as VBA programming from Microsoft, surface and solid modeling from Spatial or Siemens PLM, and translators from a host of providers. Free DraftSight excludes most of these; free DesignSpark includes most of them.
Will the Big Three notice and so react to Mr Cundle's taunt about leveling the playing field? (The three would Dassault Systemes, Autodesk, and Siemens PLM.) They have free software in 30- or 60-day demos, in so-called labs, and in education. But CAD vendors live and die by the big profits from their commercial accounts, which now under attack by the "virus" of free.
During last week's annual fest for financial analysts, Autodesk described the variety of ways it plans to rise prices and fees on customers to help get it out of its current financial decline. Now it has two interlopers is throwing free grit into the finely-tuned gears of its desktop sales.
The execs in charge of competitive intelligence at Autodesk, DS, and Siemens today are hoping that initial enthusiasm for DesignSpark will sputter and become a dying ember.
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