Microsoft attempts upgrade control

By ending upgrade licences for Office XP, Microsoft Corp. is giving corporate users an ultimatum: buy the new productivity suite – and buy it soon – or pay dearly once you finally decide to upgrade.

Microsoft is hoping its revamped licensing plan to take effect Oct. 1, known as Software Assurance, will reinvigorate revenue for its core products, particularly Office XP, launched May 31.

“If I were an IT executive, I’d be looking at this ransom demand and weigh whether I’m going to be out US$100 a head by Oct. 1, or the grace period [Feb. 1, 2002], and commit to future payments. Or do I say ‘What I’ve got works, who knows what’s coming – let’s sit tight,’ ” said Chris LeTocq, an analyst at Guernsey Research in Palo Alto, Calif.

According to notices Dell Computer Corp. and others are sending their customers, Software Assurance’s fine print dictates that if users don’t have the “current” version of Office, Office XP, by early next year, “then you would be required to purchase a new full licence when you wish to upgrade to the latest technology.”

That wrinkle will leave many users in a dilemma.

“We are going through a technology refresh right now, upgrading our systems to Windows 2000 and Office 2000 from an NT and OS/2 combination,” said Frank Petersmark, vice-president of information systems at Amerisure & Co. in Southfield, Mich.

“Even if we had time to consider this proposal, we are not in a position to take advantage of something like that. I think we will be living in this Windows 2000 world for the next year or two, and after that we take our chances and try to make the best deal we can,” Petersmark said.

Because Microsoft has gained 90 per cent share in some key markets, it has become increasingly difficult to keep revenue growing and therefore keep Wall Street happy.

“We feel this is a stepping-stone that is part of a movement to work its customers toward a constant annuity of revenue streams,” said Alvin Park, senior research analyst at Gartner Group Inc. in Stamford, Conn.

But some IT executives at large companies say they are unwilling to follow the painful upgrade line just because Microsoft is trying to keep up its revenue streams.

“We have every desktop language and operating system out there in play. So to go through a massive upgrade with something like Office sooner than we want to, just because Microsoft thinks it has a revenue stream problem, is just not my problem. This looks like an act of desperation,” said one IT executive.