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Product Activation Takes a Hit
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By Ed Foster, Section The Gripelog
Posted on Mon May 19, 2003 at 02:28:46 PM PDT
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Intuits announcement last week that next years version of TurboTax will not employ product activation is a landmark event for customers. The software industry is now on notice that if they push too far with their Digital Restrictions Management schemes, customers will push back.
Before we close the books on TurboTax product activation though, I think we need to ask one question about the episode: Why did Intuit do it in the first place? As a business decision, it never seemed to make much sense.
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Granted that Intuit severely underestimated the negative reaction they would get from TurboTax customers, the company knew all along that it would lose some customers. Sure, theres going to be a certain percentage who switch, but we think most customers have no problem with it, an Intuit spokesman told me in January. And, all along, Intuit tried to justify its move by citing sales numbers from the previous version of TurboTax showing that two or three times the number of tax returns had been filed using TurboTax than the number of licenses Intuit sold.
Intuit officials now say that product activation failed to deliver the increased sales they expected from it. Yet how could they have expected anything else? The company well knew that a fair portion of those additional returns filed with the same license were in fact filings by members of the same family, a permitted use even under the TurboTax EULA. Even with product activation, therefore, the ratio of tax returns to licenses might have been expected to remain as high as two to one. So, best case, they were only going to succeed in forcing a handful of users of pass-along CDs to pay up.
Product activation also meant Intuit stood to lose future customers due to the fact that pass-alongs had always been a great way of recruiting new customers for the next tax year. Factor in the very real expenses of the extra support personnel and computer resources needed to handle the product activation process, as well as the cost of the Macrovision SafeCast software Intuit chose as its DRM solution, and Intuits decision to implement product activation makes no sense. What were they thinking?
Im not sure what they were thinking, but I am certain that this move was not primarily motivated by a desire to crack down on piracy. Thats not what product activation is about, because there are far more cost-effective ways of dealing with piracy if thats all the software vendor wants to do. And the Macrovision SafeCast software was certainly overkill in that regard, which is why the users who first spotted it accused Intuit of employing spyware. So what did they plan to do with it? We may never know now, and thank goodness for that.
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