Microsoft's 'Pay-as-You-Go' PC Plan

Microsoft Corp. last week applied for a patent that spells out a "pay-as-you-go" concept where users would be charged for both the software they run and the computing horsepower they use.

According to the patent application filed last week with the U.S. Patent and Trademark Office, the "Metered Pay-As-You-Go Computing Experience" scheme would meter software use and access to specific computer hardware. Fees would be charged against a pre-paid or billed account.

"The current business model for computer hardware and software relies on a user purchasing a computer with hardware and software that is suited to the most demanding applications that the user expects to encounter," said Microsoft in the application. "Therefore, a user may buy a multi-core processor with a significant amount of memory and advanced video support for gaming applications that are only used on the weekend, while the user's day-in, day-out activities may involve little more than word processing or web-browsing."

Microsoft's plan would instead monitor the machine to track things such as disk storage space, processor cores and memory used, then bill the user for what was consumed during a set period.

"A different business model may allow a more granular approach to hardware and software sales," Microsoft argued. "A computer may have individually metered hardware and software components that a user can select and activate based on current need. When the need is browsing, a low level of performance may be used and when network-based interactive gaming is the need of the moment, the highest available performance may be made available to the user."

Fees would be lower for low-performance chores, such as writing e-mail or surfing the Internet, and higher for high-performance tasks.

For consumers, Microsoft said, the advantage of such a model would be a lower price at the outset for a powerful PC. Computer makers would gain the ability to standardize on higher-end systems, it added. But the company admitted that the overall cost to the user might be higher. "Although the cost of ownership over the life of the computer may be higher than that of a one-time purchase, the payments can be deferred and the user can extend the useful life of the computer beyond that of the one-time purchase machine," Microsoft contended.

Key to the concept is something Microsoft called a "security module," embedded either in the hardware or provided as software, that would meter the computer's usage. "To make this model successful, a mechanism must be in place that supports a highly secure method of adjusting performance coupled with a secure, auditable measurement and payment scheme to allow a variety of pre-paid and post-paid mechanisms for capturing and settling highly granular, infinitely adjustable, performance variations," said the patent application.

The security module would also lock the PC to a specific supplier, perhaps an Internet service provider (ISP), much as a subsidized cell phone is locked to a specific mobile carrier for the life of a contract. "The metering agents and ... the security module allow an underwriter in the supply chain to confidently supply a computer at little or no upfront cost to a user or business, aware that their investment is protected and that the scalable performance capabilities generate revenue commensurate with actual performance level settings and usage," said Microsoft.

Pricing could be on an hourly rate, perhaps with different "bundles" priced according to the software offered and the hardware necessary to run that software. An "Office" bundle, for example, might include word processing and spreadsheet software that could access two of three processor cores and a medium level of graphics performance for, say, $1 an hour.

A "Gaming" bundle, meanwhile, would make available all the PC's processor cores and 3D graphics support for $1.25 an hour.

"Both users and suppliers benefit from this new business model," Microsoft argued. "The user is able to migrate the performance level of the computer as needs change over time, while the supplier can develop a revenue stream business that may actually have higher value than the one-time purchase model currently practiced."

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