One of the questions I get asked most frequently by start-up software companies, and one that came up during The Online Opportunity event last week, goes something like this:
"We would like to build a business around a solution we're developing using the Microsoft platform and tools, but we just don't have the cash to pay for the software licenses. What can you do to help?"
Our answer is not, unsurprisingly, that you should use software that is available free of charge, and there are many reasons why we think it makes business sense to base a software business on a commercial software platform. Please note that I'm talking about a business decision here, not whether product X has feature Y, although such considerations are of course an important part of the business decision.
If you're in a situation where you're putting your life's savings into creating a new product and company, and perhaps mortgaging your house, and persuading friends, family, and strangers to invest in your enterprise, then this is clearly a big decision. You will be (or at least should be) thinking very carefully about business model (license/advertising/subscription/...), pricing, revenue and cost projections, marketing and sales plans, when to hire additional staff, and all the other things that are part of starting a new business. Picking the right platform is just one of many important decisions, and the price of the development tools and deployment platform just one of many factors that you need to take into account.
We believe very strongly that our software development platform and tools represent very good value compared to the alternatives when you look at the business results they deliver. An IDC study on ISV business performance provides some data to support this. I have to point out that Microsoft sponsored this study, and I suggest that you read it critically, but not only do I believe there is sound methodology and rigour in the work that IDC did, I also have plenty of personal experience to back this up.
Over the last four years, when I ran the Microsoft Technology Centre, we had many developers from both enterprise customers and ISVs coming in to our labs for 2-3 week projects to build prototypes of new solutions. Although the MTC is ultimately about selling Microsoft software, we take a very consultative approach and really focus on what's best for our customers and partners, even if what we end up recommending is not always exactly what our sales people wanted to sell. The UK MTC does maybe 50-60 of those Proof of Concept projects every year, and in many cases the developers have not previously been using the Microsoft tools, but they came to the MTC because there was some compelling business reason why they should give it a try (e.g. they'd tried a different platform and it didn't work, their existing tool set was discontinued by the vendor, etc.). Almost without exception, the hundreds of developers that worked on projects in the MTC during those four years left saying that they had a strong preference for working with the Microsoft tools, and were prepared to stand up and say so in front of the executives from their companies, even if they had previously been negative towards using Microsoft technologies.
It's worth pointing out that the systems prototyped in the MTC are not trivial. They include things like:
But, I hear you say, all these companies have lots of money, and for them the cost of the Microsoft tools and platform products are a small part of the overall project costs. There may be some truth in that, but the point I'm making here is that they were able to realise great business results with the software they developed, and wouldn't it be neat if even a small start-up software company had access to all the tools and technologies required to build and deploy fantastic applications like this. Fortunately we have a solution, or in fact a number of solutions, because different companies have different requirements. There is a good list of links on this page, but I'll just summarise a few of the most important ones here:
- Join the Empower programme for a nominal sum of money (currently £260 in the UK) and get all the Microsoft software licenses you need to get started with up to five developers. In return you commit to launch a commercial product using certain Microsoft platform components in a 12-24 month timeframe. Full details here. Please note that although the Program Requirements currently lists just ISV tests, we will in fact consider applications from developers that could work towards hosting certification.
- When it comes to deploying your software we have the ISV Royalty Programme and Service Provider Licensing Agreement, which provides simpler and more flexible ways of including the cost of the Microsoft software in the solutions you sell to your customers.
- For Software as a Service (or Software + Service) ISVs, there are a number of Microsoft SaaS Incubation Centre partners that will help you get up and running
- If you actually want to run the service on your own servers with your own software, you can spread the cost through Microsoft Financing, which offer loans starting from as little as £1,000 with payments over 24 to 60 months, and can cover not just the software but also hardware and services .
Perhaps the upfront costs are still a bit higher than a free download, but the difference is less than you would think by looking at the retail price of our products, and even the least ambitious of business plans should be able to accommodate the £260 required to get started, and with the benefits on offer and the business results it will enable you to deliver, that could be a very smart investment indeed.
