What Is An Enterprise Software Company Saying When It Announces A Freemium Product?

I read today that Salesforce.com has announced a freemium version of its microblogging application Chatter.

Freemium is not new for software. Microsoft did this by bundling free Microsoft Works with new PCs. MS Works gave everyone a taste of  word processing, spreadsheets and database software in the 1980s. Macromedia did this when they gave away a limited version of Authorware free with every Creative Multimedia kit. So did hundreds of other personal productivity application vendors.

But freemium is relatively new in the enterprise software market. This is because end users never had a say in enterprise software purchase decisions. Enterprise software is never sold directly to end users. So Enterprise software vendors did not have to worry about usability of the software or the value the software provided to end-users as much as consumer application software developers did.  Enterprise software providers just had to convince the CEO, CFO or CIO. Companies then purchased the software and  rolled it out to all end users. Users were trained or forced to use the software whether they were happy about it or not.

All this changed with the advent of Web 2.0 tools. User participation is the main ingredient for success of Web 2.0 tools. Adoption needs participation and users will not participate if the usability is anything less than consumer-web-quality.

So when an enterprise software company opens up its product directly to the end user by announcing a freemium model, the company may be telling the world that it is confident about the usability of its product and the value its product brings to the end user. On the other hand, if an enterprise software company is against the freemium model, it might be because the company is not confident about the usability, acceptance and adoption of the product by end users and the value the product provides for end users.

I believe that this announcement by Salesforce.com may be a major turning point in the history of enterprise software. This may be a signal that the enterprise software providers have recognized the growing influence of end users.

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