The Economics of PIMs

Posted by PIMfan
Jun 2, 2009 at 08:27 PM

With the tough economy and the subsequent end of development for several PIMs, I was reflecting a bit on what kind of business model would be needed for a sustainable ongoing-development tool. A couple of thoughts came to mind:

1) Most people on this forum are knowledgeable users of electronic tools to gather and manage information bits. The result of this is we invest time and money in getting our information into these tools, and over an extended period of use, the value of the information we store becomes considerable (at least to the information gatherer). So the end of the road for a tool we depend on can be a significant event in our lives.

2) Even though a tool may still function after development and support has ceased, we are conscious of the fact that continued use of the tool may lead to struggles to “save” the information later. The situation is somewhat akin to continuing to deposit money in a bank that is no longer in business.

3) Some tools provide capability to export data and can help address some of #2 above. But due to differences in schema and implementation, things such as relationships between elements rarely comes across cleanly, so we risk losing some of the context associated with our information.

4) In light of the above three points, I have personally come to feel that if I find a tool that meets a significant number of my needs (none are perfect), then it is in my best interest for there to be financial incentive for the developer to continue development and support.

5) Because of #4, I am personally willing to pay a reasonable amount to ensure ONGOING development and support of the tools I find useful.

6) With #5 in mind, is the typical “buy it and then own it” model for PIM software a viable business model? It seems to me that one of the problems inherent in this model is that it brings an upfront infusion of capital to invest in the product development, but as the number of units sold drops over time, does this not lead to a risk of there being insufficient incoming capital to sustain the developer’s motivation to continue development? (see InfoSelect, and many others)

7) Charging for major upgrades at a discount seems to be a potential solution, as it provides incentive for the developer to continue work so that they may see another round of capital. But the risk here is that the developer may become disinterested in continuing development due to boredom, need for new challenges, etc (see ADM).

8) Software subscription models also seem to be an option, as they provide a comparatively steady revenue stream, and incentivize the developer to continue to make improvements or risk losing subscriptions. EverNote seems to be the best example of a subscription model that is working (for premium edition of EverNote). I also think EverNote offering a free more limited model is a nice way to be able to use the service and then determine if you want to be able to step up to higher usage.

9) What are the risks of small vs. large development teams? PPL is currently the poster child for how a small development effort can be nimble, responsive, and creative all at the same time. But those of us InfoQube fans are clearly placing our trust that he continues to maintain his level of effort and interest (not to mention our daily hope for his ongoing health!). By PPL doing the work himself, he insures low overhead and avoids layers of bureaucracy that could limit his creativity. I look at larger “PIMs” such as Outlook and am struck how significant limitations continue to exist in the product (e.g. why can’t I create a folder in my inbox containing tasks AND emails???) despite their being legions of staff involved in the development effort.

10) In consideration of the above items, I reflect that I used to highly value PIM software that was “free”, as I felt I was getting value for no cost. What I’ve since come to realize is that the value (to me) of the information I choose to keep and organize is significantly more than the relative cost of the tool I use (not news to any of the users of this forum). But I have also come to realize that the presence of a business model that ensures to stability of my data, revenue for the developer, and ongoing development/fixes is nearly as important to me as my data itself. A “free” PIM is (IMHO) an invitation for later disappointment when development and interested inevitably wanes. Anyone holding their breath for Chandler v4?

Both of my all-time favorite PIMs, Ecco Pro and Omea Pro are free, yet neither one has an active business model behind it today. I reflect now that I would be more than happy to pay all over again for either tool if I knew it would revive and sustain their development…...

PIMfan