Here’s an interesting comment on software licensing from a recent article in Wired regarding the business of open source software:

“I think the software-license business model is archaic,” says Kevin Harvey, a venture capitalist at Benchmark Capital, which recently cashed in on its investments in MySQL and the open source mail-client firm Zimbra, which Yahoo picked up in late 2007 for $350 million. “I wouldn’t fund a company with that model, and I don’t think anyone else would, either.”

I definitely agree with Kevin’s statement, and, in general, I’m not interested in software businesses that employ a straight pay-for-license model. But, that means I (and Kevin) am being dismissive of a $270bn business: Microsoft. As fun as it is to proclaim that Microsoft is Dead, MSFT has an army of talented developers, a mountain of cash, and a couple monopolies that aren’t going anywhere anytime soon. Will they evolve away from their software licensing revenue? Only if they are forced to do so by disruptive competitors in each of their software verticals, and in the mean time they’re going to continue to mint money using an “archaic” model.

I have to reiterate that, especially in the long run, I 100% agree with Kevin on this issue, but it’s hard for me to reconcile my opinion with Microsoft’s success.