Sunday, February 22, 2009

Software taking another page out of consumer internet's playbook: FREE

A couple of years ago, after attending SaaSCon 2007, I blogged about how many of the speakers at the conference, from Marc Benioff of Salesforce to Steve Lucas of Business Objects, tipped their hats to the consumer internet world for inspiring the usability and design of their SaaS applications.

Now, it seems like software companies aren't far behind in taking another page out of consumer internet's playbook: Free.

Everywhere I look, software companies are giving away free products. Just last week, Bessemer portfolio company Tripwire released a free utility to help companies manage VMware vMotion. Solarwinds has an entire page on their website dedicated to free utilities and recently acquired a company to expand it's free tool offerings. Veeam made a name for itself with its FastSCP product (hence the nomenclature "Veeaming VMs"). And today I came across Xenocode's free virtualized browsers (I'm writing this blog post on a virtualized instance of Chrome thanks to Xenocode despite having a locked-down laptop).

For anyone familiar with the software business model (i.e., charging), this trend might sound like a crazy idea. But free isn't a trend du jour for software. It's actually a fantastic lead gen mechanism.

If you put yourself in the shoes of an inside sales rep, it's not hard to imagine why this trend has taken off. If I were an inside sales rep, I would much rather call someone who has downloaded one of my company's free tools and has been using it for a couple of weeks, than someone who I pulled off of a list, or even someone who downloaded a white paper from my company's site.

If they've downloaded the app, they'll recognize my company's name, they'll have a sense of whether they like the app's design / usability / ease of installation, and frankly, somewhere deep down inside, they might even feel like they owe me five minutes because my company gave them something for free. Moreover, in some cases, they've already gone through the trouble of installing the product; giving them access to the full paid version of the product could just be a credit card number and a software license key away (think Mozy's online backup).

The wide availability of free utility apps now flooding the market (not to mention existing and new open source projects) is going to put even more pressure on software vendors to differentiate the core products they are delivering. Many vendors won't survive: one company's Free will be another company's bread and butter. But for customers willing to pick and choose from multiple free point solutions in order to cut costs, this is just what the doctor ordered to help assuage 2009 budget blues.

I love blogging. Xenocode is my new bff: