ISV Vision and Strategy

Gianpaolo Carraro

Director, Developer and Platform Evangelism

gianpc@microsoft.com

http://twitter.com/gcarraro

Agenda• A Look Ahead• Key trends• Business models• Q&A

A Look Ahead...

Rich Experiences

3 Screens

• Rich and powerful application UIs• 3 Screens• Development continuum across form factors (.net)

Windows 7• Improved experience• Focus on fundamentals• Application modernization

Software Logo Program msdn.microsoft.com/swlogo

Mobility / Work-Life Merge(7 days Week End)

is this youroffice?

or is this youroffice?

how about this?

how about this?

Always access / Shared context

Cloud• As elastic computing fabric• As elastic storage fabric• As distribution channel

• As shared context

SaaS

PaaS

IaaS

Business Models

The XBOX example

Subscriber Acquisition Const (SAC) and Churn

• Based on public SaaS company SEC filing

• Does not matter who

• Not Microsoft

Revenue

GOOD!

Not so much!

Subscriber Acquisition Cost (SAC)

“Exposed” for 22 months

Impact of Churn: 10% Churn

Ouch!!

Impact of Churn: 4% Churn

StillOuch!!

Break Even but < 1% churn!?

Impact of Churn: Break Even

0 Churn?

What to do? (business side)

• Long term contracts (24 months locking)– Remove some of the value proposition– Often very large churn at end of contract– Or “re-acquire” customer (more SAC)

• Get money upfront – No more churn sensitive

• Lower SAC– Distribution channel (e.g. white labeling)

What to do? (architecture side)

• Have a CLIENT strategy!– Not subsidized device (otherwise SAC)

• Examples:– Mobile phone (of course)– Heart monitor device connected to cloud service– Appliance

Selling Hosted Version vs. License• ↓ Lower margins

– Cost of sale is higher• e.g. hardware depreciation (from pure bits, to bits + atoms)

• ↑ Bigger addressable market– Not only ‘software line’ in IT budget

• Illustration (overly simplified math):– 80% margin on $1M (software) line -> 800K– 20% margin on $5M (software + support + hardware) line -> 1M

Attached Services

• Additional revenue streams (typically with much lower cost of sale)

• Leverage the installed based

• The well proven “any fries with that?” strategy

Next Steps

Understand the platform

Understand the business models

Subscription

Advertising

Licensing

Transaction

Final thoughts:2 fundamental questions you should ask yourself (if not asking already)

Note:I don’t have the answers... But I have strong opinions.Happy to share them at the party

1) Do I believe rich experiences are a competitive advantage?

2) Do I believe providing choice to my customers in terms of how and where to use my application is a competitive advantage?

THANK YOU!