You've just made a fine argument for the subscription model. If people are going to be perfectly happy using the same software for a decade or more, you can see how Microsoft might want to get more than a few hundred bucks out of it.
I find this really hard to swallow. From what I've seen (admitting that's a small sample size), a significant share of businesses are still using XP, and presumably also using older Office versions. I use an XP machine at work, and I saw an XP machine at the local Gander Mountain store (the store being built just last year).
Or maybe you just meant private individuals. I suspect those mirror the business customers. Either way, I think there are plenty of Hawkmoons out there.
If you were right about people/companies upgrading so assiduously, wouldn't MS make more money by continuing to charge huge, one-time fees for upgrades?
If you find it tough to swallow, grab some Tabasco, because the data supports it.
While there is still a large installed base of XP machines and older office, it won't be long before a massive breach ends that particular practice. Indeed, the numbers are declining monthly, and hardware doesn't last forever. As mentioned earlier, the security concerns alone invalidate the "keep using it until it works" mindset when it comes to OSes. If a company is using XP (or the embedded version which is still being patched) as part of, for example, a POS system, then by necessity those machines will no longer run XP when the hardware needs to be replaced. Further, The adoption of new office versions actually accelerated with the change to the subscription model, because incremental updates to the product at a modest subscription fee are not only more cost effective, but are easier for IT departments to manage. A major version release after three years of improvements will require significant resources to transition, while a more modest improvement coming at a faster cadence is easier to roll into an IT department's overall patch management plan.
As for the money making opportunity, the research has shown that under a service-based license, businesses and individual consumers are more likely to upgrade. The larger cost for the traditional licensing/upgrade path doesn't translate into greater profit because there are more holdouts. The amount of people upgrading from Office 2000/2003 to 365 was massive. Years of spaced-out major upgrades didn't persuade those people, but an easy, modest subscription based model coupled with frequent updates being included did persuade them.
As an example, the subscription based offering for sharepoint as a service is not only one major revision ahead of the on-premises product, but also receives security and stability updates at a faster cadence than the on prem version. Many companies are even reporting installed bases of the "click to run" office products shrinking, as more of our large-scale customers' users are choosing to edit documents directly from the web apps versus on the desktop client. This, coupled with SaaS' ability to function in a hybrid cloud, data guarantees and warm-DR sites included in the pricing, and a contractually guaranteed "infinite storage" provision for our Dedicated customers (installed bases larger than about 40k users) have made the service-based offerings very attractive.
