7 Comments for this entry

  • Joe Schmoe

    #2: When you figure out how to do it, Microsoft and other soft giants will pay you big bucks. So far, no one has been able to do that differentiation by country and its economic standing. And another thing to think about it: when you buy a car in Germany and in Russia, the price is more or less the same (at least, no one cares about the economic situation). Why do you think it should be different for software?

    • denisfed

      Hi Joe
      The only thing you missing is that significant part of car’s price are direct manufacturing costs, which are unavoidable and per-item by definition. In software, R&D costs are not per item. After DAX2012 has been released, costs are fixed. So, Microsoft can have a bit more of revenue by selling Dynamics AX on a lower price in countries with lower economical development. Of course, I remember that Marketing and Channel management costs also contribute to the price of software as well as support costs and these costs depends on number of copies sold. But the problem is – support, marketing and channel management is executed by Microsoft so poorly, that without it, the product would not sell the worse. Really, do you think that this talks about ‘Cloud’ ‘Flexible Interface’ or ‘Integration to other Microsoft’s product’ can help sell the stuff ? ERP is sold to the corporate executives and to sell it, you should at least show some understanding of customer’s business and pain points and tell him how you product can help it. Whole Microsoft marketing is trying to sell some in-existent, imaginable product ‘Microsoft Dynamics’ and not any of Microsoft specific diverse range of ERP-products. So, I guess for less developed countries, Microsoft can sell Axapta w/o marketing and through un-managed channel and it basically change nothing…
      And just for the record: In early and mid-90s, Novell were selling in Russia, Russian localized version of Netware for much cheaper price (like 40% of regular price). As far as I know, it led to considerable growth in their revenue and increase in market share…
      And finally: When I started to work with Axapta in 2001, typical cost of 1 user (for typical installation) was about 1300-1400 USD per user. Now list price is about 3000 EUR. Well, I expect that it can be dropped to 2500EUR per user after negotiations with local MS office. It is like 2.5 times growth. Compare with how prices of Microsoft Office grew from 2001 to 2012. They also grew up, but as far as I remember – about 40-60%, not 2.5 times. What is the reason for such a significant growth ?

      Regards
      Denis

  • Eugene

    The fact that MS has put a lot of development $$ in the base product and acquired a bunch of ISV solutions to incorporate into the base product and decrease the gaps.
    Plus of course it is time to milk the Danish cow they bought.

    • denisfed

      Well, first of all, the very basic rule of accounting principle is that we MUST differentiate expenses and assets. Not all expenses actually add value to a base asset. Some expenses can even decrease the value. ( Say – new Distributions/Source Document architecture or ‘normalization’ in DAX2012). The whole Axapta’s history after Microsoft’s acquisition can be a textbook example of this rule. Much money have been spent on development. 40% of it actually increased the product’s value; 40% of it – had no influence on product value (Say – integration with Office Communicator);20% of it decreased product value. (Say – aforementioned features of compilation into CIL).
      Second, allow me to remind you, that in marketing a task of finding appropriate price for a good has nothing to do with costs of the good itself. Marketologist must find a point on Price elasticity of demand graph, where PED is equal to 1. The very idea that this graph can be the same for so different markets as Germany/Columbia/USA/Serbia/Indonesia is totally wrong. I understand that it is not easy to find this point, but this is one of the main function of marketing. Pity that instead of doing real market study, MBS’ marketing department is spending a huuuge funds on generating inconsistent rain of buzzwords about clouds, role-based experience, dynamic business and so on

      Regards
      Denis

  • Vitaly Kurdyumov

    Just was attarcted by Denis’ comments and thoughts about MBS policies and way of development and promoting AX. Completely support it.

  • Agus

    Interesting deep analysis Denis. I have been wondering why can’t MS sell software with differently price on each country. The only reasoning that I thought is that perhaps MS wants to prevent one for abusing license, e.g. multinational company buys license from the cheapest country it can possibly buy.

    • denisfed

      They could link users to languages. Like 20 cheap users with Albanian and 100 expensive users with Swiss-German dialect.

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