One of the most successful examples of bundling is Microsoft's enterprise plans. For instance, the top E5 plan includes so much enterprise software for so low price that it creates the perception of free software. MS Office? Free. Power BI? Free. Etc.
Tableau, which I believe is a more sophisticated data visualization application is getting squeezed out from enterprise accounts. Why? Because Power BI is "free".
Nothing in E5 is 'free', it's just included in a much more expensive license. What Microsoft has done successfully is convince people to just give up and write one big check because figuring out how to optimize spend for what you need is intentionally obtuse. Bundling is powerful, especially when used as a weapon.
Hey! Power BI is free! But we don't need it. Too bad!
Try to put together a license bundle that both doesn't include it and cost less than our E5 and we'll make you wish you hadn't.
Which is especially galling because we paid for an E3 because "it was all in there", but we found out quickly we'll, yes, the product is there, but the feature of the product you need is an up-sell license. So we pay for individual up-sells, and then get hit with "hey, why not just cave and get an E5...whether you need it all or not".
I'm sorry, but Microsoft's enterprise licensing is simply a nightmare. We're months into trying to make decisions about whether to go to E5, and we still get evasion from the Microsoft folks and the discussion quickly devolves to "just pay for the E5...it's easier". Don't even get me started on the "what of our huge investment in on-prem licenses are applicable to Azure/O365?". The Microsoft sales people just chuckle.
They are deliberately creating an information asymmetry to exploit, where none naturally exists. I really dislike these sales strategies. I mean I really, really dislike them.
How can we discourage them in the market? Is 'no sale' all we have to employ against these tactics?
I don't get the feeling you can fix this through voting with your wallet. Markets don't seem to solve these kinds of issues, on the contrary, this seems to be a negative side-effect of their core nature, that all decisions come down to profit maximization.
Maybe exerting our collective power for the public good through democracy? Some kind of new commerce regulation that would disallow bundling in general? I wonder, are there arguments that there would there be any downsides to doing that? Does anyone believe that bundling is a net positive in any sector?
Where is the consumer harm in giving a discount for buying more? Are people really complaining that Office 365 with 6TB of storage costs the same as DropBox by itself?
But actually, Ben references his prior article about the benefits of bundling
If Dropbox is a substantially better product (real or perceived), yes, the users complain bitterly (been there, done that).
If Microsoft is simply using bundling as an advantage of market share and undercutting the price of a competitor to drive them out of the market, then the consumer is harmed by the reduction of competition. Once the competitor is gone, what do you think is going to happen to the price and/or competition of that bundle? This isn't new.
If DropBox were substantially better, why wouldn’t enough people pay for it to make it a successful product? If they didn’t, the market has said it wasn’t better.
This is just hypothetical. I’m not making a judgment about DropBox.
But, in the case of DropBox, Steve Jobs said a decade ago that it was feature not a product. That is coming to pass.
I don't disagree that DropBox is a bad example. It is a feature not a product. Maybe better is PowerBI vs Tableau.
But to your point, what should be wildly obvious is that "the market" optimizes for far more than what product is "better", and that "better" (for whatever value of) is often low on the priority, whether it should be or not. It's very often the case that someone in power makes a decision along the lines of "why are we paying for Tableau when we can get this PowerBI thing which Microsoft tells me does the same thing for free". And suddenly, you're trying to learn PowerBI. You can find any number of examples where 'better' things were not what the market picked to survive.
Then you have Slack. People hate Teams so much that there are MS shops that get Teams for free and still pay for it.
Heck, Amazon has it own messaging platform - Chime. I can only assume that after much complaining, even internally we are migrating to Slack. There are plenty of public announcements about “partnerships”.
The best hope is that when the bundler inevitably takes their eyes off quality and features of the individual products and a new entrant can eat their lunch.
Heck even Office 365 for personal use is amazing. It’s the same price as DropBox and you get up to 6TB (1TB per person but you can combine it) of storage for the same price plus everything else for up to six people.
I dislike this fact so much! You're correct of course, and this is the only reason I pay for a personal/family plan. I have no issues using LibreOffice myself (and anyone with whom i corresppond has no clue that I'm not using MS Office); but my partner and offspring have needs. My partner simply prefers office 365, and my offspring uses the school's web version for most work, so it is mostly out of convenience (and sometimes has to submit homework specific via MS Office)... Also honestly, the sheer amount of online storage PLUS the inclusion of the office 365 apps vs , say, dropbox is too compelling a deal to pass up.
As a side note, i dislike how schools tend to push students to learn Office (e.g. Word) sp specifically...I feel as though generations of children are being taught only how to drive a Ford Escort car, but will be confused the day that they have to use, say a Honda Civic, or heaven forbid a non-automatic automobile. As a tangent to this, while the following has never come up when I've interviewed job applicants for my teams...but if all things were roughly equal with candidates, and the only difference between candidates is that one only knows how to use Windows and Office, and the other one knows how to use Windows, and Mac, and Linux (or at least LibreOffice or other office suites, or some combination thereof)...I'll be picking the person who was able to use/learn more than just Windows/Office! </steps down from soapbox>
Office has been the standard since at least 95. I don’t see anything replacing it in the next decade. Google attempted and is doing a pretty good job in education, but overall, it’s still not getting buy in from corporate America.
Tableau, which I believe is a more sophisticated data visualization application is getting squeezed out from enterprise accounts. Why? Because Power BI is "free".
Bundling is a huge power.