In an increasing push to sell everything as a subscription service and companies from cellphone service providers to insurance companies offering “bundling” services together to reduce costs, Microsoft’s outage since yesterday proves why bundling packages are a recipe to disaster. Since yesterday morning, Microsoft users have been unable to send or receive email or hold virtual meetings through Teams.
It may seem like an inconvenience, or even a small respite from work, but the Microsoft outage has disrupted ambulance and police services. Congress has essentially come to a standstill because staffers are too dependent on Outlook to get any work done.
Around 2007, companies began to see subscriptions as effective revenue models for their products. Coined the “Subscription Economy,” software companies were the first to take their products out of store shelves and put them on the cloud. Instead of charging a set price for a CD containing software that a consumer could run for years on their computers without paying annual fees, companies like Adobe and Microsoft stopped selling CDs and instead licensed their software as “subscriptions” with a monthly fee. Now, instead of a one-time fee of $400, for example, companies are now charging $30 to $40 a month for the software. Users must pay the monthly fee to continue to use the software.
The subscription model isn’t just a software problem. People who don’t use computers beyond email are seeing subscription costs rise on other things like television programs, movies, books and even the newspapers. Many newspapers have moved online behind paywalls ending the practice of the community newspaper making the rounds in the office or at the coffee shop.
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But is not just on computers. Consumers are starting to see subscription costs popup in the cars they drive with some paying BMW $15 a month to unlock heated steering wheels, or food clubs promising food deliveries to homes for a monthly fee. Fitness consumers are now paying monthly fees to use gym equipment in their own homes, even if they paid off the gym equipment.
In 2022 BMW introduced “functions on demand” to car owners allowing them to pay monthly fees for unlocking hardware already installed in their cars. BMW car owners who wanted a heated steering wheel or remote start could simply pay $10 to $20 a month to have the hardware already installed in their car unlocked remotely. The ConnectDrive platform starts at around $10 a month for each function the driver wants turned on.
Peloton owners must pay a monthly fee for virtual classes on their bikes, treadmills and rowing machines if they want the enhanced services that the gym equipment touts as a benefit for fitness. When the service fee is considered, paying for a gym membership provides for greater access to fitness classes and equipment.
Insurance companies and cellphone service providers have long understood the benefits of recurring revenues through subscriptions. To increase revenues, they are now offering to tie in larger pools of customers by offering bundled services under the guise of saving consumers money each month.
The most common one is the offers to bundle cell service with internet service.
The discounts seem reasonable but ignores a fundamental flaw in all bundled services.
It’s called the single-point-of-failure and Microsoft’s outage succinctly explains how one service outage can lead to long reaching problems in an increasingly technology dependent society.
Consider a consumer who bundles cellphone service with Internet from one company. The company suffers an outage. This leads to cellphones that no longer receive or make calls and have no internet access. Because the consumer also bundled home internet service, they no longer have access to Wifi leading them to be cutoff from email, chats and social media, in essence isolating them from family and friends.
But the problems don’t stop only at staying in touch with family and friends. The outage will also affect online banking, loss of access to entertainment programs like movies and radio and loss of access to medical records or even unable to access transportation services in an emergency.
Companies love to bundled services because it increases their revenues without increasing their overhead because the cables delivering internet and calls, and the support staff ensuring the services work remain the same whether the consumer has internet only or has bundled more than one service together.
Email users have now seen how email failures affects not only their communications, business and private, but how it leads to problems far outside of their work like ambulances or disrupted virtual meetings across the globe.
Now imagine what it would look life you are isolated from communicating with family and friends, not being able to listen to music or watch a movie, or worse unable to pay bills or transfer funds from one bank account to another because your phone company said bundling was cheaper.
This is why bundling services is a horrible idea.