Gartner to Microsoft customers: Plan now

Research company Gartner Inc. has once again warned Microsoft Corp. enterprise customers to review their software licensing contracts or risk paying higher prices down the road as the software maker prepares to make its full switch to a new licensing program.

After July 31, a number of licensing plans available to bulk software customers that allowed them to pay discounted prices when upgrading their desktop and server software will be eliminated. In the place of those earlier plans, known as Licensing 5.0, comes a new program first unveiled nearly a year ago, called Licensing 6.0. Under that plan, customers must purchase a license called Software Assurance, which requires them to pay an up-front price for software and an additional fee each year that entitles them to software upgrades for the life of a contract.

Many customers have balked at Microsoft’s licensing changes, which moves customers to a licensing plan that is similar to a lease. Many have criticized the company for forcing upgrades on users before they are ready to install new software. Under the expiring program, bulk software customers were able to upgrade at their own pace and still enjoy upgrade discounts.

A number of research reports from Gartner, IDC and other research companies, as well as a joint study from research company Information Technology Intelligence Corp. (ITIC) and Windows reseller Sunbelt Software Inc., reflect this customer dissatisfaction. According to one informal Gartner survey conducted in April, only about one-third of those Microsoft customers polled said they have renewed the terms of their Windows and Office licenses under the new plan.

One reason is the long-term costs of the new licenses. According to Gartner, customers could pay as much as 107 per cent more for software over the next four years under the plan. The ITIC survey, conducted in April, noted that about 41 per cent of those polled said they can’t afford the cost of Microsoft’s new scheme.

Gartner Tuesday again issued a report advising its clients to immediately review their Microsoft software licensing agreements and work out a licensing game plan before the new policies go into effect.

If customers act before July 31, they can enroll their existing software licensing plans in Software Assurance at a discounted rate. If they buy into that plan, they will get access to the most recent version of the software products they are using — which in the case of desktop software is Windows XP and Office XP — and pay an annual fee for the next three years to receive any upgrades released in that time frame. After the cut-off date, customers will have to pay steeper prices for Software Assurance.

Enterprise customers also have the option to sign on to a licensing plan called Upgrade Advantage if they are still running older versions of Microsoft software. That plan, previously available to enterprise customers under Licensing 5.0, is also set to expire at the end of July. Under Upgrade Advantage, users pay to get to the most current version of a product and pay an annual fee for up to two years that entitles them to upgrades. Microsoft is touting Upgrade Advantage as a transitional plan to ease customers into Software Assurance.

“Clients who miss the July 31 deadline could pay up to 45 per cent more for their licenses” if they were to buy a new version of their software within the next two years, Gartner analyst Alvin Park said in the report. “As Microsoft Upgrade Advantage and (Licensing 5) evaporate after July 31, so does the potential for significant savings.”