New MS licensing systems pushes frequent upgrades 

by Alan Zisman (c) 2002
First published in Business in Vancouver,  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 company's Windows operating system and Microsoft Office appears on virtually every computer desktop.The problem is in that phrase "one version or another." 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, especially 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 buyers. The existing wide variety of licence plans, with a confusing range of details and acronyms, is being replaced with the new Volume Licensing 6.0, which promises a simplified set of options. 

For example, the new Enterprise Agreement Subscription plan lets businesses use selected Microsoft products for three years, without 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 lowered 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 products for the right to run the software and have access to Microsoft's current version. 

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 between 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 they want to move up to a newer software version. Customers need to sign on to Software Assurance by July 31, an extension from previously announced deadlines. At that time, the current Upgrade Advantage program will be dropped. Software Assurance purchasers can qualify for discounts on training 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. Microsoft notes this does not require a customer to use Microsoft products exclusively; 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 used Windows 95, and has published a schedule for when users can expect it to no longer support other products. 

Product Activation, required when installing individual copies of Microsoft products, is aimed at reducing casual piracy by home and small business users. 

And Microsoft is a major supporter of the Canadian Alliance against Software Theft, which last spring blitzed local small businesses with a campaign to increase software sales and discourage piracy. 

All these changes are aimed at encouraging Microsoft's customers -- home users, small businesses, and corporate and institutional users -- to upgrade to the newest versions of Windows and Office in line with the company's timetable. 

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Alan Zisman is a Vancouver educator, writer, and computer specialist. He can be reached at E-mail Alan