Another day, another free service goes to the dogs — or logs as the case may be. LogMeIn, a provider of remote connectivity services, 10 years ago made a name for itself by offering easy-to-use, free services to access other computers and files remotely — with the idea being the company could upsell them to paid services. Today, however, the company took a turn away from its legacy product, announcing that it is discontinuing LogMeIn Free.
New users can no longer sign up, and existing users are being asked to sign up for a paid tier, which appears to begin at $49/year for two computers.
Users have seven days to make their decision, with the timer set the next time they log in (and not before).
The company’s other free services, for example Join.me, will continue to operate as before.
Existing users are up in arms over the news, criticising the company for making an abrupt change and for miscalling the market because there are comparable services out there that are still free.
“Can only echo everyone else – nice while it lasted, this decision handled just atrociously. An email on the 21st saying it stops on the….21st. Thanks for the warning,” one user wrote.
“Great service, i’m more than happy to pay for the initial year of £29, but not for 2 computers,” another user from the UK wrote. “That’s ridiculous. Yesterday I had 7 computers for free, now only 2 computers for £29. Doesn’t feel right…”
So why the change? Some have pointed out that this is a sign of how software providers are turning away from the freemium business model.
But while that may be the case in a wider sense, it seems here that the main issue is something else:
this particular freemium product was no longer converting enough paid users, or even bringing in new free users, LogMeIn tells me. That mantle, it seems, has been passed to the more popular Join.me screensharing product, which is now accounting for 70% of all new users, and the company’s Dropbox competitor, Cubby.
Ultimately, that means that supporting LogMeIn was likely proving to be not worth the investment.
“We introduced LogMeIn (and our freemium model) 10 years ago, and it proved great at disrupting the then early-stage remote access market. The reality is that the remote access market evolved – today most of us rely on the cloud and mobile devices to get to our stuff and our apps,” a spokesperson says. “Over the years we’ve expanded our portfolio and applied the freemium model to new growth markets, most notably in the collaboration market where we have freemium offerings for online meetings in join.me, and cloud sync and share, with Cubby . In fact, today, more than 70% of our first-time users are introduced to us via join.me, making it easily our fastest growing product.”
LogMeIn is not disclosing how many users might be impacted by the change, but in a note to investors on its site, it points out that revenues from its LogMeIn paid business were originally projected to be $190.3 million, and that this is unlikely to change with the discontinuation of LogMeIn Free.
“While it’s too early to project the precise impact of this initiative, we anticipate our 2014 revenue will be consistent with these estimates without any revenue contribution from this business model shift,” the company says.
For what it’s worth, the market seems to like the news: the stock is trading up 4.2 percent to $34.43/share.
Update: LogMeIn has clarified its statement on conversions from LogMeIn free to note that it’s not that new users were no longer using LogMeIn Free, nor that they were not converting. Join.me free usage is “additive”:
“That’s not the case [that new users were not coming to LogMeIn]. It’s just that the market itself is finite. So the word-of-mouth benefit of Free is limiting in a mature space…. join.me is bringing in the majority of users, but that is additive,” says a spokesperson. “It just makes sense given the strength of newer products like join.me and the mature nature of the access market to focus our attention.”