Computer Associates (CA) has changed its software licence model to a subscription policy, in a move analysts believe is more about stabilising the firm's wildly fluctuating share price than benefiting customers.
Carl Greiner, an analyst at the Meta Group, had a sceptical view of the company's motives. "From the customer's point of view, nothing really has changed," he said. "Pricing will still be based on the overall capacity of a mainframe installation, and discounts will also depend on the length of a contract and its dollar value, just like before."
Under the latest formula, users will be able to buy CA products through a monthly subscription package instead of the more traditional method of licensing software according to the number of employees.
Although the change is touted as a benefit to customers, Sanjay Kumar, CA's chief executive, agreed it would help the company to better predict its financial performance. In the past year, CA's shares have peaked at $79.40 and slumped to $23.60. Last week they closed at $31.
CA said the new model would allow customers to determine the dollar value of their software licence. They will also be able to alter their software mix as needs require.
"Our clients have told us they need more flexibility in how they license software, and a faster, simpler and more cost-effective way to do business with us in the New Economy," said Kumar. "With this innovative business model, we can now engage our clients in even more flexible partnerships that map the growth of their technology to the growth of their business."
The company made the headlines recently when its founder Charles Wang stepped down as chief executive. The company also re-jigged its corporate structure to concentrate on its core product lines, while increasing its emphasis on emerging businesses such as security and storage management software products, application development and business intelligence.
'Smaller firms may struggle to keep up with Microsoft's innovation with Dynamics' says CEO Stuart Fenton after acquiring assets from Profile Enterprise Solutions
Pete Peterson admits the firm hasn't always been the 'easiest company to do business with'
New chief exec Aaron Painter says 'longer-term strategy' could see firm tackle the Asian market
XMA bosses on becoming a 'performance VAR', pocketing £50m of Misco leftovers, and acquisition near-misses
Lee Hemani and Andy Wright reveal that XMA is aiming to boost net profits to three per cent of revenues as they run through the growth ambitions of the UK's ninth-largest reseller