Tech subscription

More and more service companies are now selling subscriptions rather than selling a one time charge product. For example, although you can still pay a one time charge to get a copy of Microsoft Office, Microsoft is putting much more efforts to sell its subscription, Office 365, which contains Microsoft Office and other services. We can see that many other tech companies, including Adobe, and game developers, are also switching their sales strategies. Sometimes, this is because of the nature of their products. For example, the cloud services have such nature, especially the cloud storage services. When people are using the cloud storage services, they need to use the services continuously, they often cannot afford buying and maintaining such expensive servers, and they may not have the knowledge to set up and maintain the servers; therefore, it makes much more sense for ordinary consumers to pay subscription fees to gain access to such services. However, not all cloud services are used by their users continuously, the users may want to pay a fee when they actually use the service. For example, some people are paying for their Netflix subscriptions, but they are not watching Netflix very frequently or they may only watch one or two certain films or TV programs, it is cheaper for them to pay what they watch if possible than to pay a subscription fee. Why don't these tech companies give such option (some actually do provide such alternatives, but more and more are switching away from this traditional strategy)?

There are several reasons for this switching. First, these tech companies are likely to earn more revenues from such strategy, because people often overestimate their commitment, for example, people overestimate their commitment to gyms. Secondly, many tech companies want to move platforms to the cloud, they see the cloud is the future of technology mainstream. Thirdly, subscription model is financially desirable. It can produce a much more certain finance future and more beautiful balance sheets, as long as they can maintain the sizes of their clients, their revenues are much more predictable. Fourthly, both companies and consumers do not need to worry about product upgrades, products can be upgraded at any time. Companies do not need to worry about releasing a major update at a scheduled rate (even if it is not quite ready yet), and consumers do not need to worry if they need to wait for the next major upgrade.