Microsoft license plan gets another look

As Microsoft Corp. formally launches its controversial new corporate licensing plan next week on Oct. 1, users in both large and smaller companies continue to register their objections to some of its terms and conditions.

Under the revamped software license plan, which Microsoft said will simplify volume buying, many users continue to feel pressured into committing to upgrading before they want or need to.

“The alternative to this [new licensing plan] is to do nothing and live with what you have got now for a long time. But many IT executives look at this as a ransom demand and weighing just how much money they are going to be out come Oct. 1.,” said Alex McWethy, IT executive with a large food distributor based in the Midwest.

If enterprises delay the decision to sign on, they may end up paying inordinately high upgrade fees for new versions of Microsoft products, according to analysts.

“I haven’t noticed much softening in the attitude of many users toward this. I think a lot of customers have resigned themselves to the fact there isn’t a whole lot they can do about it. But I also haven’t had clients calling me up to say what a wonderful thing this is either,” said Alvin Park, a senior research analyst at Gartner, in Stamford, Connecticut.

One aspect of the plan that still irks users is the requirement to have now or to buy current versions of Microsoft products in order to qualify for upgrades or discounts for the next version of a product.

Some see this as Microsoft’s way of generating more revenues for their bread and butter desktop applications and operating systems, namely Office XP and the upcoming Windows XP. Observers believe Microsoft’s desktop OS and application suite have reached their highest market saturation point and that the only way Microsoft can continue generating more revenues is through the new licensing plan.

“I think it is a way for them to continue generating more revenues while also cutting down the cost of supporting older products. And so if someone insists these older products be supported, they will be paying through the nose for it,” said one high-ranking IT executive with a Fortune 10 company, who requested anonymity. “I don’t feel their lack of revenues is my problem.”

Some individuals who run a small business out of their home have complained that Microsoft officials are pushing them toward the minimum five user license for products like Office XP, telling them they can save money over the long term if they do. These users also worry that even if they do so, they will not be eligible for upgrade discounts on products because they are not volume purchasers.

But Microsoft officials say that users running a small business or a corporate customer that wants to buy a single license for a server-based application such as SQL Server can do so and still receive discounts.

“The Open license starts at five, but if you want to purchase 10 or 15 licenses for instance, you can also purchase them through retail where upgrade [discounts] are available. However, those upgrades are not eligible for the Software Assurance [support program],” said Rebecca LaBrunerie, Microsoft’s program manager for worldwide licensing and pricing in Redmond, Washington.

The change is also causing a fair amount of confusion. Last week Gartner’s Park felt the need to put out an advisory reminding clients that in order to take advantage of Microsoft’s Advantage Upgrade program, which they have until Feb. 28, 2002 to decide on, they need to have a Select Version 5 agreement signed by Sept. 30, 2001.

“When Microsoft pushed back from Sept. 20 to Feb. 28, 2002 for users to decide on buying into Upgrade Advantage, they gave people another five months. But the company did not give them an extra five months to decide on version upgrades. Those are still going away as of Sept. 30,” Park said.

Park cautions that users who may have signed up for agreements say in July 2000, and take until Feb. 28, 2002, to decide on going to Upgrade Assurance will pay for two years but only get coverage for seven months as their contract would expire in July 2002.

Microsoft officials last week agreed saying that because several upgrades plans now available are eliminated as of Oct. 1, and Version 5.0 of the Select Plan involves a two-year contract, users should renew their Version 5.0 deal and at the same time purchase the Upgrade Assurance in order to take full advantage of the agreement.