PC Sales Cycle Has Stopped. Is the Windows era over?

Windows is the crown jewel of Microsoft. It was Windows which made Microsoft one of the richest businesses in the world; thanks to Windows Microsoft was able to penetrate the market with its other desktop and server products. But Windows was even more powerful than that. Up until recently this system was able to dictate the development of the entire “PC ecosystem”. It was the Windows, which helped Microsoft to create so called “PC sales cycle”, which forced users to buy a new computer every 3 to 5 years and which forced any other player on the PC market (both from hardware and software side) to support sales of Microsoft software. This cycle worked reliably since 80’s, has been already repeated six times and up until now has been appreciated by the majority of PC makers and software producers, because it has been bringing new repeated business to all of them. But today, to the surprise of everyone - and mainly Microsoft - the PC cycle has stopped. Vista failed to push enough users to buy the new, stronger hardware. Quite to the contrary, new hardware commodity appeared on the market that ignored increased Vista requirements and – what is even worse – it gained massive success. Whom to blame? The netbooks. And of course the new emerging web applications which ignored the rules that governed the PC world up till now. No doubt about what does this all mean. Microsoft lost its market dominance. Other players don’t need him anymore. It is now only a matter of time when the Windows era is over. The new ruler will not be the operating system – the new computing landscape will be ruled by web based services, and financed by targeted advertisement. Operating system will become again a free companion of hardware, as it was before the Microsoft created its incredible marketing tool called Windows.

How to sell the same thing again

Before we explain the PC Sales Cycle, let us first look at one important business tactics: the so-called phenomenon of moral obsolescence. This is the tactics helping companies to get repeating business from existing customers even on markets, on which this would be otherwise very difficult or nearly impossible.

Every company needs to earn revenues on an ongoing basis. It seeks to have recurring revenue, because it needs to gradually finance its operations and growth. For companies selling services this requirement is met automatically. The more successful is my service, the bigger is my users’ base and the more money flows into my business. For companies which operate in the commercial software market it's however more complicated. Let us illustrate the problem by the following example.

Existing legislation gives all buyers of commercial software the right to use such software for a life-time. This represents a significant problem for software manufacturers. If I have a car, it will rod over time, the engine will stop working, so sooner or later I will have to buy a new one. The same holds in principle for any tangible goods - washing machines, refrigerators, vacuum cleaners, etc.

In contrast, for example a word processor is "eternal". It cannot rod; it has nothing what could break. It will always work as well as (or as poorly as) in the beginning. In the worst case, its users can really use it for their life-time. In that case they will unfortunately never buy any other word processor. And if all customers behave this way, the market of word processors will disappear.

This is obviously unacceptable for the software manufacturers. If they are unable to sell to existing customers, they cannot get the “low hanging fruit”, the easy revenues. This is even worse for the manufacturers that control significant market share of their particular market, because they have even smaller “free” market where they can grow. There must be a way to sell the same user the word processor again!

And indeed there is such a way – it is called moral obsolescence. The manufacturer comes up with a better product than the existing one, puts the new product on the market and offers it to its existing users. If customers consider that this new product (in our case a word processor) is really better, they will purchase it and pay for it to the manufacturer again. Up to this point this strategy is reasonable and fair to all participants.

The Problems Begin

Problems occur when the product has already undergone several such improvements, and therefore there are no features that this product would significantly lack. Users of the product are essentially satisfied. It sounds very good, but such a situation is in fact very threatening for the software manufacturer. In the worst case scenario these satisfied users will use their products (in accordance with the license) until the end of their lives, because the manufacturer is unable to offer them anything better. This would mean that these users will never pay the manufacturer again. The software manufacturer however desperately needs revenue from his existing users! He needs this revenue the more, the bigger market share he owns. The bigger market share he has, the smaller space for growth is available to him.

The solution is to create a new product even when the original product is good enough.

The manufacturer must therefore find new features at any price, because without them he cannot introduce a new version to the market. This principle can however lead only to two results.

Result 1: Growth of complexity of user interface

In the best case scenario the manufacturer adds features that are not important for most users, but still are somewhat useful. Apparently, this should cause no problem at all - why couldn’t my word processor have some built in features that I might make use sometimes in the future?

The reality is different. In fact, any new unnecessary feature (slightly) complicates control, and thus the usefulness of the whole product (again slightly) deteriorates. The more functions are added over the time, the more complex and confusing the work with the product becomes. Even the most advanced modern aircraft doesn’t have several hundred buttons and displays in its cockpit. A "modern" word processor, unfortunately, does have such a complexity. As a result, effectiveness of usage of such a word processor gets worse and worse.

Result 2: Re-making features and UI

In the worst case scenario the manufacturer is unable to find any reasonable function that is missing, and so it starts to re-invent the existing functions. This, however, has even worse implications to the users, because things suddenly work differently than the users were used to. The worst idea the manufacturer can have is to remake the user interface.
What can be a “modernization” of UI compared to? Imagine you bought a new car. With high expectations, you sit down to your new car, but at the same time you have to start looking for where the manufacturer put this time the steering wheel, or where the manufacturer has newly decided to hide brake and gas. Later, when driving the car, you are many times stuck because you suddenly could not cope with situations that were easy for you even one day ago, in your old car. And on top of that you are forced to constantly read and swallow the new marketing handbook in which "expert" explains to you that this change is actually the best for your efficiency.

In fact, users do well know how quickly and effectively they work in a familiar environment, where they do not have to think about how to find things and how to do tasks. Worst on the contrary is a work in an environment where every three years someone completely reorganizes things on our table. This means a real harm to any effectiveness, regardless of what the marketing experts claim.

Moral obsolescence

The conclusion is very simple. When a product develops to a certain stage, any further modification of it only reduces its practical usability and the efficiency of its users. Software companies are forced to do these “surplus” modifications, because they are vitally dependent on revenue from repeat sales and they have no other option how to sell the same product again. This dilemma results in a situation that can be called as "swelling of commercial software."

Two development stages of mass market products

To sum up, every commercial software (but this holds for basically every product on the mass market) develops through two stages:

1. Development phase – in this phase, innovation is natural and valuable.
2. Destruction phase – in this phase, innovation is artificial. The product is already beyond the stage when innovation makes sense. The innovation is now motivated only with the need to sell new product to the same customers. In this phase, we are facing the phenomenon of “artificial moral obsolescence”.

The specific of commercial software is that software producers are forced to develop their products beyond reasonable innovation for as long time as possible. The longer they are able to stay in the “destruction phase”, the bigger revenue they get. Every additional sales cycle counts in the company revenue. Companies in, say, consumer electronics market can do “destructive” innovation, too (see e.g., some models of Nokia phones), but they are not so desperate because they have also other options – to create a really brand new innovative product and thus return into the “development” stage (this is not possible in the, say, word processor market). In addition, everyone in the consumer electronics market knows that new innovative products (e.g., iPhone) can earn the company much more money than even the smartest and longest “destructive” innovation.

Swelling of operating system

This problem of “software swelling” is built-in into any commercial software. Operating system is no exception here. Also operating system must bring repeated revenue to its manufacturer; also this product is after some period of innovation in fact good enough and reasonably usable. So which are the specific consequences of “software swelling” for the operating system?

The operating system originally served as a simple tool to enable comfortable control of the hardware. Openly speaking, it should have stayed in this area. In particular, its role should be to provide a relatively stable platform for other applications and abstract the application software from the diversity of hardware (through the HAL - Hardware Abstraction Layer). Everything else should be left for the application software. (Naturally, Google Chrome goes right into this area of a simple lightweight OS – it doesn’t reinvent the wheel.)

Well, this is not how Windows looks like these days. As a result of the need to sell Windows to existing customers again and again, Windows gradually developed into a complex bulky system that includes more and more applications and services on top of a relatively complex user interface. Vista includes a browser, media player, DRM system, indexing system, etc. It is of course only the decision of operating system manufacturer what he would like to add to its operating system. Microsoft in particular, quite logically, adds components that support its other applications and services.

Emergence of the PC sales cycle

To be fair to Microsoft, we have to say that the "swelling" is an essential feature that is built into any commercial software, Microsoft cannot do anything too much about this. Microsoft depends on the sale of the operating system with a large part of its income. It does not have really any other option than to publish every three (if possible, preferred) to five years a new, "improved" system, to milk the market for some additional money. In the recent years, however, it became very difficult to find "improvements" that were still not built-in in the OS functionality (and which would not break the backwards compatibility). This problem became particularly strong during Vista development. Many bloggers and authors commented that existing users are already satisfied with Windows XP and don’t see any innovation opportunity here (and thus any compelling reason to migrate to the new system). Hesitant adoption of Vista by the market confirms reasonability of these opinions.

The influencer

The operating system has a unique position in the entire ecosystem of commercial software: every commercial application depends on it, and if the position of operating system is strong, even PC manufacturers have to closely watch its development and adjust their hardware. Any change in the operating system has therefore implications for the entire computer market.

Microsoft was able to use this dependence of the market with a real mastership – it created in fact a strong dependency of all application software manufacturers and PC makers on the success of its operating systems, and hence on its own success. It was a sophisticated mechanism, called "PC sales cycle."

PC Sales cycle

PC sales cycle is 3 to 5 year long cycle during which the PC users are forced again and again to buy new hardware, new operating system and new application software. The cycle begins with the creation of a new operating system, which has higher hardware requirements than the previous one, and therefore it is not running (or it is running only under very limiting restrictions) on the existing hardware. Hardware manufacturers are however already prepared to resolve this “problem of the users” and are coming with their offer of readily prepared new hardware that is certified right for this new system. Also manufacturers of application software do not hesitate to use this opportunity and bring promptly new versions of their products, which are able to make better use of the new hardware and new features of the operating system.

The main role in the sales cycle is played by two companies - Microsoft and Intel. For this reason, people sometimes speak about the Wintel (Windows + Intel) alliance. Of course, no formal alliance ever existed, however the better this system worked! Every new version of Windows operating system forced users to buy a new, more powerful hardware, and then the new software which made a better use of this hardware.

Even until today companies calculate the "moral" life of corporate notebooks and PCs as 3 to 4 years. They take it as a fact and incorporate it into their IT budgets. No one asks questions like, for example, why the computer must be disposed of after only 3-4 years of usage, while a TV set (a similarly complex product) would keep operating without major problems for 15 to 20 years.

Corporations also automatically allocate in their budgets money to purchase new versions of the operating system. Again, no question asked. On the monopoly market, you don’t have many choices, do you?

Microsoft however helps its customers to make such migration decisions much easier. Promptly, without unnecessary delays it notifies its customers that it is going to cease support for previous versions of its operating system, so everyone who decides not to migrate should understand he will not be supported.

End of the PC sales cycle

Vista was no exception to this proven strategy and shortly after Windows Vista launched, Microsoft announced that it would "not support Windows XP too much beyond 2008." This plan however never materialized. Around the time when Microsoft wanted to stop selling Windows XP, something unexpected occurred, that prevented Microsoft to make this step.

Lightweight devices called “netbooks” entered the market and started to gain popularity. The problem was that netbooks were unable to run Vista. In full compliance with the PC sales cycle Vista had to be more hardware hungry than XP. Unfortunately, netbooks are lightweight devices and their priority is portability, not performance. This is also what makes them appealing to more and more people.

Netbooks – the breach of the plan

Netbooks are a clear violation of the original plan: first time in the PC history, Microsoft was dislocated from the hands-on control of the sales cycle. Vista has inevitably higher hardware requirements than XP, to allow manufacturers to make money on their new hardware. Netbooks are outside of the will of Microsoft. This means very likely the end of the Wintel alliance. Its end will be as informal as was its beginning.

From our point of view it is rather surprising how long the PC sales cycle was running. It has repeated in total six times. The explanation is however easy: all participants on the PC market were happy, because the cycle yielded to the PC industry much more money than if the industry was left to the free market competition. In the situation when one major player was "conducting" the PC market, everyone was able to sell every 3 to 4 years to the same customers again, and therefore everyone benefited from new versions of Windows (Microsoft made the other PC players dependant on its own success - see this IDC analysis [PDF, 147 KB] of December 2006 - for every dollar earned by Microsoft from the sale of Vista the other companies in the PC ecosystem will make $ 18).

Maneuvering space of Microsoft

Microsoft had to respond to the success of netbooks. The company decided to keep selling Windows XP and accelerated to the maximum extent its work on Windows 7, which will again run on netbooks.

Here we should stop for a minute. This is a real landmark moment. For the first time since its dominance on the PC market, Microsoft has again to adapt to the market developments. This is the first version of Windows ever that is less hardware hungry than the previous one. After a long time it is not Microsoft who determines the evolution of the market. This puts Microsoft into a new, unfamiliar position.

In addition, his maneuvering options are very limited.

Microsoft Limitations

Microsoft, for example, cannot afford itself to develop a lightweight system with limited functionality. Microsoft must convince users that the OEM price of about $ 10 to $ 50 for one netbook brings visible functionality. If the operating system was light, almost invisible (however effective), it could hardly be distinguished from other systems, which are also almost invisible and also work, but are free.

Especially in the netbook market Microsoft will have a very difficult situation. When the price of these devices come down to $ 100 to $ 200, every dollar spent for operating system starts to be really visible on this very competitive market.

Microsoft, in addition, can not waive its backward compatibility. The main competitive advantage of Windows is that users can continue to use all their software, which they are used to and which they previously purchased. This is the main reason that keeps the users loyal to Windows. But it is also a brake on further development. Microsoft cannot thus go to a fundamentally different concept that would address issues such as viruses.

When will Windows die?

In summary, the position of Windows 7 will be very difficult, specifically in the netbooks segment. Unlike Google’s Chrome or Intel’s Moblin, Windows will start more slowly, due to backward compatibility they will allow to run not only all current programs, but also all existing "malware" and viruses. They will also mean a significant price increase on otherwise cheap netbooks. Any growth of netbooks popularity further undermines Microsoft's position in its key operating systems business.

And what will be the position of Microsoft in the traditional desktop? I have no doubt that it will remain very good. The question however is, how long will this market survive. Example of netbooks teaches us that users are already aware that there are alternative approaches how to do things. The fact that the sales cycle ended is very significant warning that things are not going to be as they were only few years ago.

The question therefore is as follows: how long it will take before the mainstream functionality moves from the desktop to the web. Once users start to look for functionality on the Internet, they will have no more the reason to look for it, and therefore to pay for it, on the desktop. The battle for the customer will then finally move from the desktop to the Internet.

At the same time this will end the era of commercial software, as well as the business tactics of artificial moral obsolescence. I am sure nobody will miss this particular feature of software.

Life in a glassy fishbowl

One interesting comment appeared today on my previous post:

Anonymous said...

Well described. However there is missing area. Security. People usually not expose contacts which could be pretty close and they feel that another their contact dislike/ hate the person. Second, not all communication whatever intensive mean we are friend or colleagues. Imagine yourself complaining to any bigger company. Many times long story and no relationship will happen. Third, Unified ID. Thanks God there is no way how to enforce it (now). ID itself is great idea, however real people abuse anything they can. Now you loose at maximum limit on your credit card. However with digital identity you could loose more. In worst case you could be completely impersonated with all consequences. In digital world (now I exclude mixing of real and digital world) your reputation could be easily harmed and your chance to prove your innocence is limited

2:23 AM

Good points! However, the future world will not care about which developments we would prefer to happen. There is one general observation we can make even now: the level of transparency our our future world will change. My hypothesis is that whether we like it or not, this "transparency level" will increase significantly. It however doesn't mean our world will necessarily become a worse place for life. It may work just the opposite way: if all information is transparent we can live a more peaceful life than today - no more will anybody be a subject of gouging, no more will anybody be nervous that something secret will be found out. All information will be public. Everybody will have to live his life with a full knowledge of this fact to avoid negative surprises.

The other side of this new set-up however is that we all will have to accommodate our life to this new situation. We will have to live our life as if we stood at every moment on a public stage. It is not inappropriate to compare this situation to a new kind of religion - from the time when the God saw everything (so people had to behave gently and appropriately), we are now approaching a situation when we can be sure that whatever we do can be observed, archived and found by anybody, even by our worst enemy. (And to be frank, to a great extent we already live in this situation today - or do you really think our emails and calls are safe these days?)

Meet my mistress, darling!
Specifically to your first point: I fully agree with your comment that not all our contacts would appreciate to know all other contacts we do have or we communicate frequently with; for example, our wife will not appreciate our mails, calls and meetings with our mistress(es), your boss will not value our job application to the competing companies, etc., etc. However, as I said above, this will be not our choice to decide which information we will share with whom (I do exaggerate here, but only slightly). It will result in a new, "transparent" world and this world can basically have two consequences:

1. People will start to behave "more appropriately" (knowing the consequences of each steps they are doing), or
   
2. People will become more liberal and will accept certain situations as "normal".

I frequently think about how this new level of transparency will influence peoples' relationships. My tip is that the final result will be between these two extremes and will be different for different areas (work code of conduct will probably be more liberal than the personal code of conduct). It will be certainly very interesting to see how this develops.

Business of personal?
Your second comment falls into a more general category of how to split "business" communication from the personal one. The question is, do we need to split them at all? I agree with you that although even in business we can (and do) make friends, we all have personal experience with annoying communication with institutions which lead nowhere (only to personal frustration). But my experience tells me that in these situations we tend to limit the communication to an absolute minimum.
In addition, there are other tricks that can be used, which will help to separate the"real" relationship with the fake one. If somebody is, say, a speaker of a large corporation, he automatically gets lots of messages every day and he also replies to lots of messages, because it is the nature of his work. In this amount of communication, his personal share of communication with any particular client gets naturally pretty low. And this can be one of the clues to our problem. Weights of the friendship can be taken relatively in respect to the overall amount of communication of every person of the communication.
Interestingly enough, such an algorithm would work also well with celebrities, actors, politicians, sport stars, and all people who receive lot of attention and thus lot of communication (even with our boss). It would automatically take into account the "weight of the communication" on every side of the communication. The more asymmetrical the communication is, the less important the relationship probably is. There is certainly need to work out such ideas to a much more detail and to come up with better and better algorithms.

Let's live in a glassy fishbowl
To your third point: yes indeed, everything in our world can be and will be misused. I don't however think an instant "loss of identity" can occur; on the other hand, somebody can pretend he is you. But to make this really work he would have to do it continuously for a long time and invest quite a lot of energy into it. Frankly, most of the people have other things to do. In other words, most of the people are normal: tell their real names when we meet them on the street, do wear their own faces, not masks, and tell their real names to the phone when they call us. So I tend not to be too pessimistic here. But indeed this will be a problem. Certainly some mechanisms will appear to fight these frauds and certainly there will be even smarter frauds invented that circumvent these mechanisms. But as I said, most people behave normally and this is, frankly, why our world works, and why the future world will work, too.
Much bigger problem would thus will be how people will cope with the new transparent world where there will be an absolute minimum of personal secrets. It will depend only on us how we tackle this new situation.

So I would correct your saying slightly:

In a digital world you will have to build your reputation every moment of your life.

Wrong concept called “digital” friendship

Let us discuss the concept of “digital” (=Yes/No) friendship that governs today’s social networks. I am afraid this concept is outdated as it doesn’t reflect reality of peoples’ relationships. It should be replaced by a more natural concept of, say, “communication proximity”, which would be dynamically built on frequency of communication between any two people.

The long-term solution would be to incorporate a standard to the internet that would unambiguously identify people along all ways of their communication. Even if I read an article of certain author, this should be calculated as his one-way communication with me. If I post comment under that article and the author reads it, it will be already a two-way communication. After collecting all these data, everybody would have a personal map available to him that would automatically map people in his neighborhood – from his closest friends to some remote potential contacts; in addition there should be possibility to map people not just by frequency of communication, but also by common professions, interests, hobbies. In other words, even results from this mapping exercise would be highly personalized and would offer variety of outputs. This model would correspond much closer with reality than today’s digital Yes/No schemes.

Ideally, contact management systems should be developed that would automatically watch all means of my communication: email systems, IM systems, (VoIP) phone applications, and that would also integrate with my calendar, as personal meetings are also a way of communication. To allow these applications being established, a clear method to uniquely identify people in their different ways of communication should exist. Yes, we are again returning to the concept of “Unique Personal Identificator” described earlier in this blog. Unfortunately, nobody has the authority to define such a thing, even if it is very useful. Several interesting attempts exist (e.g., FOAF), but the way to go is probably through creating a de-facto standard.

And now we are coming to our question. How can, to your opinion, such a standard develop? Which is the most likely scenario that would force people to use certain identification method in all their communication?

I have some ideas and I am ready to share them with you, but would love to hear your opinions first.

My third book: Effective business on Web 2.0

My new book arrived on the market these days. For those of you who can read in Czech language it brings some practical tips of how to use internet applications dubbed “Web 2.0” in everyday business. We are not in a fully automated world yet, but we are getting closer and closer to this vision literally every day. Enjoy!

Opportunity to be filled: personal notes in contacts

The history taught us one lesson very clearly: the best chance for adoption have those products that solve particular customer problem. So let us have a look at one particular customer problem now; problem which is well known, but yet unsolved today. It is a problem of managing personal notes in our contacts.

Most contact organizers, both in paper and electronic form, allow users to add personal comments to any contact in the database. This in fact splits the information in organizers in two groups:

1. Contact information with up-to-date phone number, email address and job title – this part would be preferably updated by the contact himself;
2. Strictly personal judgments and notes that are unambiguously linked to the contact information, but still remains the sole property of the user who wrote it. This part cannot be updated automatically and may be shared if and only if it is explicitly required.

To my knowledge, solution that would separate these two categories and would allow synchronizing the public part while still keeping the private part untouched doesn’t exist on the market. “Personal tags” in Xing are not satisfactory for this purpose indeed. In a long-term, "Unique Personal Identificator" defined earlier in this blog, would solve this problem – it would unambiguously link all information about particular person both on the web, and in personal notes of whichever form. But before these general solution emerge, there is a gap on the market. Any interest to fill it?

Three quick tips for Gmail team

This will be a short one. I have the following recommendations for the Gmail team:

1. When searching in Gmail, display not only emails that contain searched words, but also contacts containing these words. Alternatively, add “search contacts” next to “search mail” button.
2. After opening an email, make the email addresses “live” – allow opening particular contacts by right-clicking to any email address, which is displayed in the header or in the body of email, including addresses in “From”, “cc:” or “To” fields (should work similarly like the "Linkedin companion" plugin for Firefox)
3. Allow opening mail messages in new windows, for example by right-clicking to emails in inbox

I am sure these changes would be quite helpful and still very easy to implement.

The Implications of the Cracked Zune (and iPod)

It was clear that the protective DRM software of MS Zune player will be broken one day. Few people however predicted that it will happen so soon. Just one week (!) passed after the official launch of Zune and somebody already found out How To Use The Zune as a Hard Drive. In fact, using media player as a hard drive is a functionality that is normal to most of the competing players, however, for the MS-Zune users, this was excellent news. Going from there, other things became suddenly possible, including the very useful tip How To Bypass The Zune's WiFi Sharing DRM.

Both these methods force users to a cumbersome procedure (the second one is even more cumbersome than the first one), but, and this is strange, even then they are more attractive than the implicit, built-in way. But it is only logical, because users of the built-in solution are offered:

1. to transfer files to their device only via a software that controls what can be transferred and what not
2. to artificially limit abilities of their wi-fi-enabled gadget to very limited sharing of music and video

Good news for Zune?

It is a paradox, but both these news can be in fact considered good news for Zune. By removing artificial limitations of its functionality, the device becomes more appealing to its users and can be more successful on the market. (The problem however is, that Microsoft wanted to own a platform where users are locked-in. Opening the device to competitors will not make the trick.)

Wider Implications

Zune is not alone with this kind of problems. New software promises to unlock iPod, iTunes, the most popular player and music download service on the music market. In such a case, a broader question should be answered:

Does it ever make sense to create protecting mechanisms in today’s time, when such mechanisms can be broken in matter of days?

Long-term solution

As regards music, from a longer-term point of view no technology can avoid its copying. Instead of fighting against the inevitable, another approach should be chosen. We should invent such a business model of the music industry, which will be in compliance with the fact that music can – and will – be copied. Selling individual copies of music and trying to protect them through cumbersome (and sometimes even buggy) DRM systems is not the way forward. Instead, the music industry should learn from the software world. Similarly to the shift of software towards the “Software as a service” model, the future of selling music will be ensured by selling tracks to providers of interactive services. While music for personal usage will be for free, authors will get paid in the case of any commercial usage of their work.

Music will become the essence of new interactive services. These services will be so attractive that majority of users will prefer to consume music through these services than to download the free “pure” music. Thanks to this, future users will “pay” for most of the music they will listen to (the word “pay” is in quotations because typically even these services will be for free for the end user, as they will be sponsored by targeted advertisements). By the way, even today the majority of users listens to music through paid services (TV and radio channels). So this service-oriented model of music sales will be very natural as it will be built on existing behavior of users. It will also not require any new pattern of consumer behavior to be learned by users.

Why these services will be attractive?

Let us name just few examples of possible services of the future:

• an interactive radio where virtual clubs of fans of certain genre or a particular music group are formed and served
• educational service teaching its participants the basics of music
• “smart” libraries allowing search for music “similar to” other music, or browsing through music that “people similar to me” like
• automatic recommendations systems of various kinds
• radio that “understands” my mood (thanks to seamless collaboration with other web apps, including my calendar) and automatically offers me what I want to listen to (of course, feedback is implemented, so e.g. a particular track can be skipped and system learns from this)

Why services?

Services have two nice properties:

1. They cannot be copied.
2. They are more attractive for customers than just the music alone. This will assure that future users will “pay” for most of the music they will listen to.

It is not a coincidence that the solution for the music industry copies developments of the software world. Software as a service made already its entry in Wikipedia. Why the “Music as a service” entry is still missing there?