Are Enterprise Software Prices Collapsing?

Mellmo CEO Santiago Becerra has had to swallow a bitter pill.

When Becerra briefed me on a new iPhone application for business users last week in New York, he told me that an enterprise license for the software, which makes it easier to read reports from business information crunching applications on relatively tiny iPhone screens, would be $100,000 per server, plus a twenty percent annual maintenance fee and a one-time $100 per user charge.

At the time, I told him I thought that getting budgetary approval of that size for an app that basically lets iPhone users have a more pleasant experience when reading reports would be a pretty tough sell, particularly in this economy. But Becerra argued that large enterprises increasingly rely on workers who are on the road and, "what is the value of having a $10 million SAP installation if people can't read the reports?"

Mind you, Becerra is no novice to the world of enterprise software. The guy is a former Booz Allen & Hamilton management consultant who later founded Graphical Information Inc., a software company he sold to Oracle. Then he founded Infommersion, a report visualization application vendor that he sold to Business Objects (now, not so coincidentally, owned by SAP), in 2005. As his corporate bio reads, "both acquisitions resulted in the successful integrations of the products into the acquirers' business applications."

Be that as it may, today, Becerra told me the price of his application has dropped to $10,000 for a server license -- a ten-fold reduction in price.

We've recently seen that SAP has frozen its maintenance fees until it can prove value to its customers, and Oracle has given some customers a form of "vendor tax" holiday. Are these signs that enterprise software vendors have finally realized that there really is a crisis out here?