Wall Street reportedly has recognized the value of subscriptions over traditional sales.
Barron’s reports that while Apple (AAPL) investors fret over the latest iPhone sales, the market has rewarded Microsoft (MSFT) for locking in a regular stream of revenue tied to the cloud and its Office 365 franchise.
Barron’s explained that those old Windows software boxes have been replaced by shiny mobile apps tied to monthly payments.
Barron’s reported that recurring payments have changed the way that Americans consume software, music, movies, television, fitness, clothing, and food.
"Merchants can see revenue months down the road, while customers get convenience, customization, and the promise of ongoing service upgrades for one, all-you-can-eat price," Barron's explained.
“Retention is the new growth,” Adobe CEO Shantanu Narayen told Barron’s. The subscription model, he adds, has made the company more responsive, with developers tracking customer habits and updating software in nearly real time.
“What is so obvious in retrospect with a transaction-based software model is that you’re at least two steps removed from the end customer,” Narayen adds.
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