New MS licensing systems pushes
by Alan Zisman (c) 2002
First published in Business
Issue #651 April 16- 22, 2002: High Tech Office column
You've got to have pity for Microsoft.
Sure, one version or another of the
operating system and Microsoft Office appears on virtually
computer desktop.The problem is in that phrase "one version or
If your job is ensuring Microsoft a continuing healthy cash flow, that
phrase must chill your heart. In the past year, Microsoft released new
"XP" versions of Windows and Office. They've sold well enough,
bundled with new computers.
But the huge base of pre-existing
users has not rushed
to upgrade, and instead continued to use, Windows 98 and Office 2000 or
even Office 97.
And customers who use older versions
don't bring any income.
As a result, Microsoft is changing the rules for how it licenses Office
to large customers, such as corporations, government and other major
The existing wide variety of licence plans, with a confusing range of
and acronyms, is being replaced with the new Volume Licensing 6.0,
promises a simplified set of options.
For example, the new Enterprise
plan lets businesses use selected Microsoft products for three years,
owning the products at the end of the agreement. Subscribers can opt to
extend the plan for an additional one or three years. Microsoft has
the minimum requirement for EA customers from 500 to 250 PCs.
A new Software Assurance plan replaces
a variety of licence
plans including Version Upgrade, Product Upgrade, Competitive Upgrade,
and Upgrade Advantage.
Software Assurance charges customers
an annual fee of
25 per cent -- that's 29 per cent of the licence price for Microsoft
for the right to run the software and have access to Microsoft's
According to Microsoft, this saves
money for customers
who typically upgrade every three-and-a-half years or less.
Conversely, it is more expensive for
customers who upgrade
less frequently. The Gartner Group estimates cost increases
68 and 107 per cent for customers on a four-year upgrade plan.
Customers who do not sign on for
Software Assurance will
have to buy a full licence rather than pay upgrade prices (previously,
60 per cent of the original licence cost) when they eventually decide
want to move up to a newer software version. Customers need to sign on
to Software Assurance by July 31, an extension from previously
deadlines. At that time, the current Upgrade Advantage program will be
dropped. Software Assurance purchasers can qualify for discounts on
and services provided by Microsoft-certified partners.
In addition, big customers can qualify
for a reduced-price
Enterprise Agreement, by paying a licensing fee for all their PCs.
notes this does not require a customer to use Microsoft products
the customer is free to use other or competing products, as long as it
has obtained a licence from Microsoft for each computer.
At the same time, Microsoft is
dropping support for older
versions of its products. It is no longer supporting the still widely
Windows 95, and has published a schedule for when users can expect it
no longer support other products.
Product Activation, required when
copies of Microsoft products, is aimed at reducing casual piracy by
and small business users.
And Microsoft is a major supporter of
Alliance against Software Theft, which last spring blitzed
small businesses with a campaign to increase software sales and
All these changes are aimed at
customers -- home users, small businesses, and corporate and
users -- to upgrade to the newest versions of Windows and Office in
with the company's timetable.