Almost a year ago, I raised the question asking if free is going to be the future of PLM? You can take a look on this discussion here. Additional discussions related to the “free” topic also happened. However, most of them were related to the notion of Open Source PLM. Nevertheless, today, I’d like to get back to this topic in the strict FREE context.
Before talking about PLM, I’d like to take you back into 19th century when two French economists – Cournot and Bertrand built models of the competitive world. They basically came to the opposite conclusions. According to Cournet, companies need to keep production lower in order to keep price high and not going to drop prices to the marginal level. According to Bertrand, model was opposite and in short assumed that manufacturers need raise production to get additional market share by taking down the product price. The second theory got back to us in today’s digital economic.
Let’s get back to PDM/PLM world. My hunch is that high prices and low profit are very typical for this space. Companies are competing with products having similar functionality (just compare portfolios of leading PLM vendors) and “successfully” driving prices and margins down more and more. At the same time, “user’s adoption” becomes a very critical topic in PDM/PLM space. In the situation when PLM products introduce more and more issues, customers are looking more and more on the alternatives (i.e. non-PLM software like Excel or emerging vendors providing open source or on-demand products).
So, what can be a solution to resolve this dead-lock? In my view, the ultimate solution can be taking price down to the ZERO level. By making basic PLM/PDM functionality free, we can expect improved user adoption and growing market share. Associated with this, quality of the software will be improved due to massive implementations for the huge amount of new customers. Now, you will ask me when PDM/PLM vendors will take money to do such action? I have few potential answers and will be interested to discuss what do you think about such options:
1. Selling support contracts and services
2. Selling online storage, traffic
3. Selling premium functionality
4. Selling information about organization work for the future improvement
Actually, I see, some of these processes already started to happen. The massive introduction of PDM functionality bundled with CAD is sort of trying to “sell for free”. There is a significant interest to model of Free Licenses etc.
Just my thoughts… What do you think about that?