Computer Associates' new software pricing scheme isn't as drastic as a business breakup, but the motivation was the same. CA had already taken steps to boost its share price. Founder and chairman Charles Wang stepped down as CEO, giving the title to Sanjay Kumar, former president and chief operating officer, as part of a reorganization. The company has spun off one division, and Kumar wants to spin off another one each quarter so Wall Street can value each unit independently and appropriately. The latest effort involves offering CA's software under a subscription plan that will give customers more flexibility.
Companies can rent software month to month or over longer periods of time.
If they stay within agreed monthly payments, they'll be able to mix and match the apps they run. Financial analysts applaud CA's move, saying it will be good for shareholders. Customers are also optimistic. John Hood, MIS director for Bayard Sales, a privately held floor-covering distributor in Philadelphia, likes the idea of being able to switch from one software application to another. That's a lesson Xerox has learned the hard way.