Does Scalix pay a licensing fee to the devil (Microsoft)?

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florian
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Postby florian » Thu May 22, 2008 7:59 pm

joako wrote:I think the point TheDude was making, and I'll agree I have setup scalix community for some smaller clients in the same boat, that many people can live without AS support if their only choice is upgrade to Enterprise Edition AND pay for those licenses, vs just pay a per-device license fee and keep the community edition.


So just to recapitulate - you are currently making money (assuming you charge your smaller clients for your work at least) on a product we are creating with huge development efforts and we don't see a dime on this. Which is fine as this is how community edition is laid out. Now you are suggesting that we should start throwing in even more functionality - especially one, wireless contact and calendar sync, that is used in business environments. People using such functionality are willing to buy pretty expensive phones (two of those, on the expensive side, costs around the same as our 20 user starter kit!), paying monthly fees to their carriers that top our per-mailbox one-time perpetual license fee. You would probably charge these folks for setting all this up or hosting it. And again we should be the ones seeing minimal return, although the active sync module, when finished, will have taken an investment of several man years (i.e. in the 6-7 digit range) to create?

Sorry to say so, but I don't think this makes sense. At all.

The big IT houses are going to be using Exchange anyways those looking for an alternative probably are either 1) the minority, those that just have a personal preference for software that isn't made in Redmond (I'm one of those but...) and those are probably the ones NOT running Outlook and not running Windows Mobile device (I won't part with mine, however) 2) looking for a solution on a budget.


Not true. We are just looking at winning over a customer that I am personally involved with that is five digit user range, pretty much Exchange suitespot, and the reasons why they consider going with us is that we provide for more flexibility, we don't force particular directory architectures (think AD) upon them, and we are easier to deploy and cost effective.

Even if the pricing was the same as Exchange, there would be cases we could make for our product. It is way cheaper, though, especially for Enterprise accounts, if you take the lack of a per-server license fee, the cheaper operating system, the easier upgrades (11.3 to 11.4 takes 10 minutes - try that with Exchange) and others into account.

Add to that features that you don't have with Exchange - like the newly introduced Proxy Folders or a webclient that is a true desktop replacement with full delegation and now Overlay Calendars or CalDAV client support and many more, and suddenly Scalix becomes real value for money.

Sure, we haven't seriously broken into Microsoft's market share big time, but then you're talking about one of the cornerstone products of the world's largest software maker, sitting there at 70%+ or so market share worldwide. I'm pretty happy with a fraction of that as it is, but this is serious business and not a toy store. And, for the record, we have won a couple of large shops in the past and I believe will continue to do so.

Say the pricing is $50 per device per end use for Enterprise Edition customers I would see it as a **HUGE** selling point for CE if you could just buy those same licenses (and also additional seat licenses for premium users) at the same price with no minimums and no strings attached.


The additional cost for the ActiveSync option is yet to be announced, but what I can say is that it is going to be per-user, you will be able to add it to both Small Business Edition and Enterprise Edition, and you will be able to add it to both Premium and Standard Users. Given that the price of even a premium user starts is at around $20-$30 (depending on the market and if you buy the SBE-50 starter kit) and the price of a standard user is substantially less, if you then add some imaginary value for the wireless option on top of it, you will end up with a WAY lower per-user cost than the number you are providing. We've looked at the market, the offering is highly competitive and we see no reason to make it even cheaper. I don't think the base price of SBE-20 and SBE-50, also considering it inlcudes some basic support, is prohibitive for anyone in search for a solution with integrated wireless capabilities. Just to repeat, all these prices are lower than Microsoft's Small Business Server if your main use for it is Collaboration (slightly different when you start using SQL and others, but actually manu people only use Windows Server, AD and Exchange), which is already priced VERY agressively.

You say Enterprise Edition is a value compared with Microsoft SBS, but SBS includes the Outlook licenses ... well I can't do a price comparison because sometime in the past approx 6 months all pricing details were deleted from scalix.com, but from what I recall smallest edition cost $1500 for 20 users.


Well, SBS starts at 5 users, which is basically covered by Community. User packs are not that cheap. SBS 2003 currently does include Outlook, but given Microsoft have removed the Outlook licenses from Exchange 2007, I wonder if the next version of SBS will follow along with this. The key point is - with Scalix you can use Outlook, but you don't need to - many people are replacing Outlook with Scalix Web Access these days and are more than happy to do so, saving both cost and maint efforts. Alternatively, you can use free Mozilla eMail and Calendaring clients - our clients of choice are more than ever.

And the price point you're giving is incorrect, our lowest package with 20 users goes for about $650, and at around $1000 you already get 50 users, so we are way more cost-effective even on the base licenses and not taking other cost into account.

SBS is $560 (T72-01411, from CDW, but can find it for <$400) for 5 users + 15 CAL (T74-00001) would run approx $1700 from CDW) = 85/user... less than the cost of an Outlook license.

Scalix works out to be is $144 per user ($45 Scalix) when you consider Outlook costs (543-03007, $99 from CDW). Evolution connector for Scalix is no way on par with using Outlook.


Well, again, you got the numbers all wrong - if you want to get the true story, please contact Scalix sales or one of our resellers and they'll make the case for you. I really won't engage into this discussion here.

So besides the Microsoft FUD and perceived problems of inter-vendor compatibility there are the costs which are almost identical between products. You might say open and select license get better pricing for Outlook...well those are the shops that are more likely to be licensing the entire Office suite and which are more likely to use large AD forests and use Exchange because "its from the same vendor so it will integrate better"


Again, 9 out of 10 (or is it 98 out of 100) customers tell us different, so I will take that as good reaon to believe their words.... :-)

If you really believe you're cheaper and better off by doing Exchange, with all the consequences, the interesting question becomes why do you continue bothering and simply go with it. Others come to different conclusions, based on true numbers and facts, and we're happy to have them as customers.

You can trust that we watch the market together with feedback from customers and prospects very carefully and come up with packages that allow us to grow our share in a highly competitive market.

Florian.
Florian von Kurnatowski, Die Harder!

florian
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Postby florian » Thu May 22, 2008 8:20 pm

Addon - just googled around a bit. Information is not confirmed as Microsoft hasn't officially announced anything yet, but on various forums it is commented - and some claim to do that based on MSFT sales statements - that SBS 2008 will not incude Outlook 2007 licenses in it's CALs. To me this makes sense as it is inline with what they did with Exchange 2007.

There goes your point. :-)

Furthermore, I may want to add that I almost feel sorry to have let myself been dragged into a discussion centering around raw cost. I usually rather like to think and talk value and I feel confident we've plenty to offer!

Good luck,
Florian.
Florian von Kurnatowski, Die Harder!

LeoP

Well spoken

Postby LeoP » Sat May 31, 2008 3:03 pm

Hi Florian,

this was well spoken - I am impressed. Allow me to add something "from the front", i.e. from our discussions with our customers on the way of making them your customers also:

- The reduction from 25 to 10 "premium" users on the community edition has cost us quite a lot of Scalix sales: For bigger organisations, with a "free-as-in-beer" approach, this is simply a less tempting stepping stone. They use PostPath now.

- 99% of Microsoft Desktop users have MS Office - so the price of Outlook is a no-brainer. But when moving users to OpenOffice, we also move them to some sort of Mozilla Calender, which they are not used to, so this means for us: To move users to OpenOffice (a necessary component to move them to a Linux desktop!!!) we now have to convince them to "not only loose Excel, but also loose Outlook", not an easy thing to do.

Best regards,

Leo

florian
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Re: Well spoken

Postby florian » Sat May 31, 2008 4:01 pm

LeoP wrote:They use PostPath now.


Given what I know about them, that surprises me quite a bit; obviously also, they wouldn't save any money over our SBE licenses, which, especially at the 50-user price point are more cost effective. Any more details on this?

- 99% of Microsoft Desktop users have MS Office - so the price of Outlook is a no-brainer. But when moving users to OpenOffice, we also move them to some sort of Mozilla Calender, which they are not used to, so this means for us: To move users to OpenOffice (a necessary component to move them to a Linux desktop!!!) we now have to convince them to "not only loose Excel, but also loose Outlook", not an easy thing to do.


That's why most our customers actually start using SWA, even at their desktops, and that's why we've made SWA so highly intuitive for previous Outlook users. A good number of our customers have replaced Outlook with the web-based client.....

Cheers,
Florian
Florian von Kurnatowski, Die Harder!

LeoP

Postby LeoP » Sat May 31, 2008 5:21 pm

First of all, please understand, that I am not critisizing you or the Scalix crew - I just wnat to give Feedback. A big part of my job is to help customers break out of the Microsoft lock-in, so the questions we are discussing hit me every day (well, every week)

That said:
Given what I know about them, that surprises me quite a bit; obviously also, they wouldn't save any money over our SBE licenses, which, especially at the 50-user price point are more cost effective. Any more details on this?


Simple: PostPath needs no Outlook-plugin (which might break on an Outlook update blablabla), so customers suspect:
PostPath License+Outlook Installation and Maintenace Costs < Scalix License+Outlook (with plugin) Installation and Maintenance Costs
This is a "light" version of the "Exchange: Same Vendor, good Integration, good TCO" belief, but it is incredibly hard to root out.

That's why most our customers actually start using SWA, even at their desktops, and that's why we've made SWA so highly intuitive for previous Outlook users. A good number of our customers have replaced Outlook with the web-based client.....


Please understand, that moving a years-old Microsoft infrastructure to alternative plattforms, instead of a 2+ Generations newer Microsoft infrastructure is a highly intrusive process - the customers never know and thus never understand, that moving to a current MS infrastructure would be intrusive too.
What customer's crew fear most, ist to be bereft of their beloved Outlook, that often contains ALL of their day-to-day data. They fight tooth and claw to keep it.

The freedom of choice of client is an excellent argument for you and me, but it is a lousy argument to use for an office-drone that does things the way he has done them for 10 years exactly the same way.

Best regards, Eugen

florian
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Postby florian » Sat May 31, 2008 5:38 pm

Hi Eugen,

no offense taken, no worries - however that I fail to get from your arguments is what your request to us is, i.e. what we should be doing different, if anything. I don't assume you're trying to talk us into reverting the 25/10 Premium User change for Community Edition. I have explained the reasons for this move at length, and all-in-all, it has done the job - while it really hasn't changed revenue much for us, it has helped some of our partners, especially in countries with smaller average deployment sizes quite a bit with their services value proposition. Therefore, I'd consider this a success. Also, it has simplified some of our support discussions considerably.

CHeers,
Florian.
Florian von Kurnatowski, Die Harder!

LeoP

Not talking you into it

Postby LeoP » Sun Jun 01, 2008 4:13 am

Hi Florian,

I don't assume you're trying to talk us into reverting the 25/10 Premium User change for Community Edition. I have explained the reasons for this move at length, and all-in-all, it has done the job


No, I'm not trying to talk you into this! Your own words say it best:

while it really hasn't changed revenue much for us, it has helped some of our partners, especially in countries with smaller average deployment sizes quite a bit with their services value proposition. Therefore, I'd consider this a success. Also, it has simplified some of our support discussions considerably.


Which has - naturally - the opposite effect for countries/partners/independent system consultants serving bigger structures.

I don't really want you to make something completly different (at least for now - sorry, couldn't leave this one out), I just want to see you succeed (because that has a positive effect on me being successful):

- The market is changing: Until not too long ago, Scalix was unique. Now there is also PostPath. Citadel is next, otlkcon is in the breeding (which gives a boost to allmost every "web only" groupware out there), just Zimbra is stagnating.

- Bigger customers (I do not mean 1000s, but ca. 100 desktop users) value "Free as in beer" higher than "Free as in speech" or "Free from vendor lockin": Close to every Scalix deployment we made started out as a community edition, only when everybody loved it would one consider to take the 50-pack (only talking premium users here)

Just keep this in mind - you (as well as we) need to balance between "easy terrain", i.e. the 20-50 User environment, where Microsoft will not put up a too stiff fight and the uncharted terrain: 100+. Not so easy, but this is where REAL inroads are made!

Anyway, let's not discuss this to death: Keep up the good work, we will try better to make those, who are pissed off by 25-10 happy again (CalDAV and Lightning could be a way for that), and you will try to offer a better and better bang for the buck.

Best regards, Eugen

florian
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Re: Not talking you into it

Postby florian » Sun Jun 01, 2008 4:43 am

Again, no worries that I'm coming back again, this is not to have the last word, but rather add more to my understanding of the market.... :-)


LeoP wrote:Which has - naturally - the opposite effect for countries/partners/independent system consultants serving bigger structures.


Well, the expectation wasn't that way and I don't see this as natural at all; countries with bigger average company sizes also have larger businesses in general (and, statistically, are countries with generally higher price levels for all kinds of products), so all the other feedback I received from those places was basically that they don't care because it really only makes a difference for people with 11-25 (premium) users, there aren't that many of those, and for them it's still a bargain at the SBE-20 price level - note that the per-user cost is still way less than, say, Microsoft SBS and, espeically in that range, less than all the competitors you name, afaik.

- The market is changing: Until not too long ago, Scalix was unique. Now there is also PostPath. Citadel is next, otlkcon is in the breeding (which gives a boost to allmost every "web only" groupware out there), just Zimbra is stagnating.


With it's true clients-of-choice paradigm and it's commitment to strong server side integrations (as now demonstrated again by the Proxy Folders concept, of which you'll see quite a bit more in the future), I think Scalix is still very unique. Surely, some other things we've done in the past as industry-firsts (like the first full desktop-replacement AJAX email client, 2 years before Zimbra hit the streets) are becoming more commoditized, but my natural reaction is not to make the product cheaper or anything like this, I'd rather innovate and make it better. We try to do! :-)

- Bigger customers (I do not mean 1000s, but ca. 100 desktop users) value "Free as in beer" higher than "Free as in speech" or "Free from vendor lockin": Close to every Scalix deployment we made started out as a community edition, only when everybody loved it would one consider to take the 50-pack (only talking premium users here)


Right, but there is no free product with all the commercial features for organizations this size, that's just how the market goes. Again, the only impact would be for organizations in the 10-25 range, and I really can't see how that would make the difference for a pilot deployment (By the way, if you need more users to test, you can get a 50-User Enterprise Edition key - including the new Anti-Spam features, etc., so a lot more value - as a 60-day trial off our website. our sales team will be happy to give you a longer trial where needed, or one with more users).

Just keep this in mind - you (as well as we) need to balance between "easy terrain", i.e. the 20-50 User environment, where Microsoft will not put up a too stiff fight and the uncharted terrain: 100+. Not so easy, but this is where REAL inroads are made!
.

I agree, and that's why our product in the 25+ user range, SBE, since it's inception is more agressively priced than any other product in the market. Once upon a time, there was only Enterprise Edition and the entry-level price of Scalix was around 5x higher as it is and we had real difficulty getting into this space. With Small Business Edition, this issue was resolved.

Anyway, let's not discuss this to death: Keep up the good work, we will try better to make those, who are pissed off by 25-10 happy again (CalDAV and Lightning could be a way for that), and you will try to offer a better and better bang for the buck.


Absolutely, and with all this happening we're, btw., also continuing to add value to free/standard users as well - CalDAV, including scheduling functionality, is available for those users, so in most cases you don't need a premium mailbox for a CalDAV user (unless you require delegation, public folders or free/busy)

We'll do our best to keep everyone happy, that's promised.
Florian.
Florian von Kurnatowski, Die Harder!


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