NI's move to subscription software

[EricR]

I know you were surprised with this change in NI's software implementation and many of you are upset with how the changes impact you and your businesses. My purpose with this message is that you understand the motivation for this change. I believe there is a big opportunity for us to work better together.

Subscription models at their core, do three things, all of which are important to NI and the people using our products.

1. They lower the price-barrier to entry because they shift the profitability from a "all or nothing" approach to a "pay as you go". This makes it easier to acquire new seats and lowers barriers to entry. Yes, ongoing costs are higher than with SSP, but they are controllable ongoing expenses instead of a large upfront cost. This is important to a lot of companies, especially during and coming out of COVID where companies costing models experienced big shifts from capital expenses to operating expenses.
2. They create an ongoing dialog and relationship between a company and its users. This allows the company to better understand how its products deliver long-term recurring value to its users. When our products are built better, it enables you to do your job better, and you, your company, and your customers all benefit.
3. They create predictable revenue that provides long-term stability to a company which is used to invest in the products you use. It is important for companies you regularly do business with to have stability in their revenue and for their investments to be aligned with the products you use.

I have read your comments and wanted to provide my thoughts.

• Please keep in mind that debug and deployment licenses are not included in this change. Those licenses remain perpetual. All the "deployment" and "end customer scenarios" that I have seen described here should be covered by one of those options and still be perpetual.
• Subscription requires a company to provide recurring value to customers. If we get the engagement right, if those engagements lead to the right features and products being created, then we deliver better value to customers, and they continue doing business with NI on an ongoing basis. Those are some big "ifs". I highly value having your help in making sure we get this part right, not just for LabVIEW, but for all our software.
• In a subscription model, a company must constantly engage with customers to understand what they are doing and how the company needs to be adding value going forward because there are renewal windows that come up all the time. I have a lot of accumulated evidence that engaging in these recurring subscriptions does in fact drive better engaged discussions with our users. These discussions drove features and products which added additional value for existing users and made the products more useful to new users.
• While there is a potential for subscription-based software models to be more profitable to a company, this potential only comes if the company can successfully deliver recurring value to customers. Since NI cut our upfront prices, there is a significant short-term loss for us, but it also directly lowers the initial price barrier for customers which will allow for growth in the overall community, new users, and new ideas. If we do not deliver features and products that provide value to these customers, they will not renew. We have an incentive to maintain the relationship and fully understand the needs of our users.
• At the time NI made this change, a large portion of our users were already using subscription-based software. Some part of this decision also came down to simplifying our portfolio - choosing a single model to offer software through. Between many users already using it, and the other benefits I listed, the subscription model is the right choice.

Thank you all for the feedback you have already provided and please continue to provide your thoughts. I hope this post helps you better understand NI’s decision in transitioning fully to a subscription model. We want more people using LabVIEW because we believe it is the best development tool for building Test and Measurement systems. By lowering the cost barrier to entry and increasing the relationship with users, we believe more people can and will use LabVIEW.

[Jay14159265]

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@EricR wrote:

I know you were surprised with this change in NI's software implementation and many of you are upset with how the changes impact you and your businesses. My purpose with this message is that you understand the motivation for this change. I believe there is a big opportunity for us to work better together.

Subscription models at their core, do three things, all of which are important to NI and the people using our products.

1. They lower the price-barrier to entry because they shift the profitability from a "all or nothing" approach to a "pay as you go". This makes it easier to acquire new seats and lowers barriers to entry. Yes, ongoing costs are higher than with SSP, but they are controllable ongoing expenses instead of a large upfront cost. This is important to a lot of companies, especially during and coming out of COVID where companies costing models experienced big shifts from capital expenses to operating expenses.
2. They create an ongoing dialog and relationship between a company and its users. This allows the company to better understand how its products deliver long-term recurring value to its users. When our products are built better, it enables you to do your job better, and you, your company, and your customers all benefit.
3. They create predictable revenue that provides long-term stability to a company which is used to invest in the products you use. It is important for companies you regularly do business with to have stability in their revenue and for their investments to be aligned with the products you use.

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So if I am going to make a new product, why do I choose Labview against all the other options out there? ... that is THE problem and only NI can provide the answer. 

Responses from a guy that has to decide to jump ship or stay on with Labview.

1) Maybe at the conference table at NI headquarters this makes perfect sense but out in the wild I can tell you that small business absolutely look at the ROI for any purchase made, capitol or otherwise. The trend for small to medium business is to get out from service contracts for dev systems that provide no ROI, we just keep getting hit with maintenance fees. For software, we have just worked hard to get out from under the Keil / IAR contract maintenance fee hell and that is no place any one wants to go back to (and those guys used to have the market cornered so you didn't have much choice but to pay them, now NI has no market cornered so why are we paying?) so when NI says they have this great new way to provide a service, do your homework, this model will fail, it's only a matter of time and how much collateral damage it will do. The sad thing is, is that the collateral damage will probably be the death of Labview. 

2) This is a total BS marketing line. For years I have had some FNG NI guy calling and emailing me as part of the labview SSP saying things like; "just consider me part of your engineering team : )" So every few years or so I will ask them an engineering question at which point they either; A. disappear, or B. ask a bunch of useless questions then tell me I should use some off the shelf NI solution. So what are we to expect, more of this BS? what a great value proposition for an engineering firm. 

3) Well I guess that is true for as long as it takes for everyone to write Labview out of their systems. 

I think the big misunderstanding on NI's part in regard to Labview, is that the recurring cost is providing recurring value to an engineering firm like the ones I have worked for. Most of the software development for a product (hardware or hardware systems) happens at the very beginning of a products life and for the rest of the product life it's only software maintenance. So in the new NI model, they would have an engineering firm pay for the software maintenance period of the product lifecycle and that is a proposition that is a non-starter for my firm and I imagine many others. Again, sitting around the NI conference table there are probably some Labview customers that are in constant development cycles and they become a target revenue stream for NI's subscription model but I imagine it leaves many other users in the dust, so how does that play out, death by slow attrition as Labview developers retire and existing labview based products go to EOL. There will not be new adopters,  the argument about lower barrier to entry is total BS because no one is going to choose that route if it leads to maintenance fees for the rest of your life. I have sat around the R&D design table for the inception of enough products to know how well building in a recurring software cost into a product goes with the management ... it doesn't. 

The big problem is that Labview does not do anything you cant do with other development tools. Originally Labview had a great value, it allowed an engineer or scientist the ability to have some easy access to software development (where the barrier of entry was high, learning, C, Fortran, or Verilog and creating/dealing with hardware drivers). Boy how times have changed, Labview still does the same trick but every new engineer knows python at some level and the development tools for other languages are light years ahead of what they were 20 years ago and getting better all the time ... and many of them are free to use for commercial product development.  

So if I am going to make a new product, why do I choose Labview against all the other options out there? ...  At this point the answer is looking like a half cocked sales pitch, " You get the same thing you always got, but now you have to pay more for it! But it's better because we now offer a solution to a problem you don't have" -- awesome, sign me up : ( 

[BertMcMahan]

I believe the answer to some of this is "that's what the Debug/Deploy license is for", but...

1- I can't figure out how to price a debug/deploy license. Do I have to get a quote for that?

2- I don't see it being popular to tell management "I need $2000 to rent software for a year to develop it. And I'll also need another $2000 (or whatever) for a permanent license to be able to ever view or edit this code again."

I'm not sure exactly how the debug/deploy license thing works in practice (like getting a quote, purchasing the license, applying it to computers, etc) and I've tried to look it up already. I would recommend getting that language REALLY ironed out, since you're going to have to basically sell someone a permanent license along with their software rental. It doesn't sound good on the surface.

By the way... as someone who already uses LV on a lease basis, it works pretty well for me since I'm a LV consultant. However, 100% of my customers want two things: they want a copy of the source code they paid me to develop, and they want to be able to make minor tweaks themselves. A debug/deploy license will likely be the way to go, but if I as an Alliance parner can't figure out how to quote and sell it to a customer it's going to be pretty tricky for this to get off the ground.

[BigApple0]

Looks like a teaser rate to me.  Every subscription model I've ever seen eventually jacks up the price once enough people buy into it. 

People who know subscription models know how they work.

If you want a better relationship with users, invest in R&D and product documentation.

My guess is NI realizes they are losing customers.  The subscription model is the "safe" move.

Eventually there will be no creativity or originality left in the corporate world.  All companies will just copy what others are doing and follow suit.  Certainly these business decisions will impress a board room but not many other people.

[Saila21]

The decision NI has made to move to subscription licensing is an unmitigated disaster for my company and my client relationships.  Not to mention my client's requirements.

This shows absolutely no consideration of applications that are offline, standalone, and/or required to have fixed pricing within the contract mechanism.  Budgeting to purchase NI hardware and software as a bundle for a one time cost with a known value and known technical/commercial risk is how some of us do business.  Not having even the option to pay a little extra for actual "ownership" of that license seat is a significant problem.  

Picture this.  You have 10 computers in different buildings in different sites all running LabVIEW that are stand-alone computers.  No network access, and in many cases no facilities for external media interface.  With a perpetual license there is lower business and technical risk because for the most part once I commission a system it just keeps running, until there is a contract to perform an upgrade.  If these licenses require renewal regularly, or "expire", now we have to budget the labor hours to pay someone to go around and maintain all of these systems, coordinate their access, interrupt operations.  This is a recurring expense, exactly the kind of thing we're trying to avoid as a company and a service provider.  

And as we've seen with a pandemic, natural disasters, and other major disruptions, the ability to send people around to perform this type of work can become a critical path activity and a significant single-point failure.

Additionally you're going to run us all afoul of contract and tender clauses regarding configuration management, recurring expenses, dependence on external systems.. 

The alternative is what?  Pay more for the remaining two perpetual license classes you offer and functionalities we may not need, for the ability to continue to use what we paid for in the first place?  Charge our clients more for this?

I only hope that there's enough collective disgust with your decision that more license options are made.

[Konan__]

https://www.youtube.com/watch?v=b7aUJyJbJMw

It's always the same story when Sales and Marketing people drive the company. 

They don't know what is a great product.

[Mark_Yedinak]

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@Saila21 wrote:

The decision NI has made to move to subscription licensing is an unmitigated disaster for my company and my client relationships.  Not to mention my client's requirements.

This shows absolutely no consideration of applications that are offline, standalone, and/or required to have fixed pricing within the contract mechanism.  Budgeting to purchase NI hardware and software as a bundle for a one time cost with a known value and known technical/commercial risk is how some of us do business.  Not having even the option to pay a little extra for actual "ownership" of that license seat is a significant problem.  

Picture this.  You have 10 computers in different buildings in different sites all running LabVIEW that are stand-alone computers.  No network access, and in many cases no facilities for external media interface.  With a perpetual license there is lower business and technical risk because for the most part once I commission a system it just keeps running, until there is a contract to perform an upgrade.  If these licenses require renewal regularly, or "expire", now we have to budget the labor hours to pay someone to go around and maintain all of these systems, coordinate their access, interrupt operations.  This is a recurring expense, exactly the kind of thing we're trying to avoid as a company and a service provider.  

And as we've seen with a pandemic, natural disasters, and other major disruptions, the ability to send people around to perform this type of work can become a critical path activity and a significant single-point failure.

Additionally you're going to run us all afoul of contract and tender clauses regarding configuration management, recurring expenses, dependence on external systems.. 

The alternative is what?  Pay more for the remaining two perpetual license classes you offer and functionalities we may not need, for the ability to continue to use what we paid for in the first place?  Charge our clients more for this?

I only hope that there's enough collective disgust with your decision that more license options are made.

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While generally I agree with you I just wanted to clarify that applications you built and run as an exe do not have an expiration date on them. When installed they will not and need not check with a license server so that application will run until the computer dies with no intervention.

As currently outlined, I think this subscription model is very bad. I could see how it would work and be acceptable if the costs were much lower and it was possible to get short term licenses to use when an update is needed. This type of think would allow a company to contract the work out, get a copy of the source and if needed get a temporary license to make minor updates. For contractors they can maintain their license but at a lower cost. however doubling the price for the annual subscription price is simply not a good thing for anyone except NI. Which in the long run will lose because LabVIEW usage in general will die off.

[JÞB]

Many of you need to take an accounting course. 

Operating costs are operating costs and come off the cash assets table as incurred. 

Capitol costs are Capitol costs and transfer cash assets to capitol assets that are neither liquid nor easy to amortize.

Your perpetual license is Capitol.  The SSP is operating cost.  A SRL Lease was always operating cost.

For small business "Cash is king"  

[Jay14159265]

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@JÞB wrote:

Many of you need to take an accounting course. 

Operating costs are operating costs and come off the cash assets table as incurred. 

Capitol costs are Capitol costs and transfer cash assets to capitol assets that are neither liquid nor easy to amortize.

Your perpetual license is Capitol.  The SSP is operating cost.  A SRL Lease was always operating cost.

For small business "Cash is king"  

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So for a small engineering firm with one seat of Labview. Are you saying it is easier to amortize $5,000 over 20 years than it is to pay a service fee of $2,000 every year for 20 years?

I have a client that is using labview 2012 on windows embedded 7 hardware, they purchased the single LV licence in 2012 and will continue to use it for maintenance until the EOL for their product which is another 10 years from now. That's a big value for a small business. 

Apparently this is the kind of customer that NI wants nothing to do with but it is the kind of customer that hires people like me to write software. And people like me are the ones that keep Labview alive because I use it and up until recently I recommended it for projects just like that. 

In the previous post I mentioned that some collateral damage of making Labview subscription based  would be the death of Labview. I was thinking more on this and the name Labview might survive but the software itself will probably end up being exactly like Rockwell's Studio 5000, some specialized thing that some big companies use but is not adopted widely outside that. And it looks like NI is ok with that. It leaves a bitter taste for someone that has invested time learning and implementing projects in Labview as if it was a general purpose programming language. It makes all those years of listening to peers say, "Labview is not a real programming language" ring true ... should have listened.  

[BowenM]

There's one other (big) problem that I haven't seen brought up yet.

In business or academia, you sometimes find yourself with extra funds available. Whether it is a project that ran under budget (as I frequently saw in academia), or a lump sum of money at the end of the year (as I've seen in industry with some regularity), you will want to use these extra funds to purchase software or hardware upgrades for your lab that will provide long-term benefits. It is important to note that these funds are always a one time lump of money, usually in a "use it or lose it" scenario.

In the case of a subscription model, using unexpected funds to purchase LabVIEW is now off the table because you have actually to purchase something, not sign up for a service. The funds won't be there next month to pay the bill.

Every lab I've ever worked in (from a small college particle accelerator lab to a large test lab for Honeywell Aerospace) has used the "unexpected funds" bucket to purchase LabVIEW. And I can say with confidence that none of these labs would have signed up for a subscription service with these funds, and instead used them for something else and just changed software platforms.

This move to subscription model only "makes sense" (in quotes because I'm not convinced it does) for a business whose model is developing for external customers. If you have in-house development for anything, you're going to balk at the recurring cost of a subscription model.