No Vista, Office ‘reparations,’ Microsoft says

Microsoft Corp. said reports that it secretly plans to offer “reparations” to corporate customers hurt by delays in the release of Windows Vista and Office 2007 are inaccurate.

eWeek reported Wednesday that Microsoft’s OEM group is readying a “customer incentive program” that might offer rebates to enterprises disappointed over not getting an upgrade to the next version of Microsoft software — even though they bought a multi-year SA maintenance contract for it.

Sunny Jensen Charlebois, product manager for Microsoft’s Worldwide Licensing and Pricing Group, said “there is no reparations strategy. “The story took a lot of liberties. There is nothing exceptional being planned for those who signed up for Software Assurance more than three years ago. When you have any new product come out, there are tools and offers to support the adoption of it. It’s really business as usual.”

Microsoft partners who attended last month’s Microsoft Worldwide Partner Conference in Boston and analysts who cover Microsoft licensing issues also said they had not of any special program in the works.

“We have not heard of any program that will address the needs of disgruntled SA holders,” said Keith Ackerman, marketing director and CIO for New Berlin, Wis.-based SoftwareOne Inc., a Microsoft reseller that specializes in licensing.

“To the best of my knowledge — and I talk to Microsoft quite regularly — Microsoft is not doing anything like this,” said Al Gillen, an analyst with Framingham, Mass.-based IDC Corp.

SA is Microsoft’s controversial maintenance program that was first introduced in October 2001. Under it, customers — usually large enterprises that buy hundreds or thousands of copies of software from Microsoft — typically pay about a third of the cost of their software license every year over the life of a 3-year contract.

While SA offers a variety of benefits to users, many buyers fixate on the right to receive a free software upgrade during their three-year subscription, which until recent years was the length of time between releases of most Microsoft software.

But as products such as SQL Server 2005, Office 2007 and Windows Vista were delayed, many subscribers saw their SA expire without getting the upgrade they expected.

In an extreme case, some SA subscribers could have bought a 2-year contract along with Windows XP when it was first released in October 2001, re-upped for a 3-year contract, and see that second contract expire this October without having received any upgrade.

Microsoft currently plans to release Vista to corporate volume customers in November, and make it generally available to consumers and small businesses in January, at the same time as Office 2007.

Microsoft maintains that the SA contract does not guarantee software upgrades, and has tried to appease disgruntled subscribers by adding other benefits.

But it has otherwise held the line against overhauling SA in any significant way by lowering the price or changing the length or time frame of contracts.

Paul De Groot, an analyst with Kirkland, Wash.-based Directions on Microsoft, said he doubts that Microsoft would be secretly planning to buckle.

“To do this would create an incentive by subscribers not to renew their contracts,” he said. De Groot also said benefits aimed at disgruntled subscribers, even if they were one-time-only and handed out in secret to only to Microsoft’s largest customers, would likely backfire.

“There is no such thing as ‘quiet and discreet,'” De Groot said. “If word got out that if you pushed Microsoft hard enough they will make good on the upgrades, the doors would fall as everyone rushed in. And then Microsoft would have an even huger problem.”

However, one customer said that if Microsoft decided to appease unhappy customers with short-term incentives or changes to SA, he would welcome it.

“They must have a few intelligent people in their marketing department, who recognize that a lot of customers have never really been happy with the SA program,” said William Blank, IT director for Buchart-Horn Inc. The York, Pa engineering firm subscribes to SA for SQL Server, Exchange and Windows Server because, according to Blank, “to a certain extent, we didn’t really feel Microsoft was giving us any other viable options.”

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