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ISV Vision and Strategy Gianpaolo Carraro Director, Developer and Platform Evangelism gianpc@microsoft.com http://twitter.com/gcarraro
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Agenda A Look Ahead Key trends Business models Q&A
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A Look Ahead...
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Rich Experiences
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3 Screens Rich and powerful application UIs 3 Screens Development continuum across form factors (.net)
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Windows 7 Improved experience Focus on fundamentals Application modernization Software Logo Program msdn.microsoft.com/swlogo
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Mobility / Work-Life Merge (7 days Week End)
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is this your office?
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or is this your office?
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how about this?
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Always access / Shared context
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Cloud As elastic computing fabric As elastic storage fabric As distribution channel As shared context
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SaaS PaaS IaaS
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Business Models
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The XBOX example
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Subscriber Acquisition Const (SAC) and Churn Based on public SaaS company SEC filing Does not matter who Not Microsoft
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Revenue GOOD! Not so much!
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Subscriber Acquisition Cost (SAC) “Exposed” for 22 months
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Impact of Churn: 10% Churn Ouch!!
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Impact of Churn: 4% Churn Still Ouch!! Still Ouch!!
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Break Even but < 1% churn!? Impact of Churn: Break Even
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0 Churn?
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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)
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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
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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
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Attached Services Additional revenue streams (typically with much lower cost of sale) Leverage the installed based The well proven “any fries with that?” strategy
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Next Steps
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Understand the platform
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Understand the business models
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Final thoughts: 2 fundamental questions you should ask yourself (if not asking already)
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Note: I don’t have the answers... But I have strong opinions. Happy to share them at the party
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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?
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THANK YOU!
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