Subscription Software Is Changing the Rules

Still, di Bona acknowledges the attention on subscription revenue has grown, thanks in part to media hound Salesforce.com and Siebel's recent launch of its competing OnDemand customer-relationship management service.

But smaller companies like Salesforce.com that started on a subscription model may have an advantage over a larger player like Siebel, notes JMP Securities analyst Pat Walravens. "If you've been recognizing license revenue upfront and have a big base of business -- good luck moving the needle selling software for $80 a month," said Walravens, who has a market perform rating on Siebel. His firm hasn't done any banking with Siebel. (Siebel is, in fact, selling its OnDemand service for $70 a month per user.)