News

Licensing Relief? Microsoft Moves to Ease Transition

• By Stephen Swoyer
• 10/09/2001

The software giant said that it would delay the effective deadline for businesses to sign up for Licensing 6.0 -- which was originally expected to take effect on Oct. 1, and which was then rolled back through February 2002 -- until July 31, 2002. Microsoft also announced a change to its divisive Software Assurance (SA) program, as well, that would allow IT organizations running Office 2000 and Windows 2000 to enroll in SA.

Until now, Microsoft expected IT organizations to standardize on the latest iteration of its software -- e.g., Office XP or Windows XP - in order to be eligible for SA. In this regard, if an IT organization was running Office 2000 and Windows 2000 and wanted to enroll in SA, it would first have to foot the bill to upgrade to Office XP and Windows XP before doing so.

"Customers have told us that Licensing 6.0, our improved licensing program, which we launched on Oct. 1, 2001, is a significant change, but that our original five-month transition period was just not long enough," said Bill Landefeld, VP for worldwide licensing and pricing at Microsoft, in a prepared statement. "Given the economic climate today, it's clear our customers were right."

The United States' questionable economic climate notwithstanding, some observers suggest that Microsoft has tinkered with its Licensing 6.0 timetable in response to mounting pressure from corporate customers. The software giant's revised licensing agreements have been angrily received by customers who don't balk so much at the unit cost of Microsoft software, but at the rapidity with which they're expected to upgrade to it if they're to reap any value out of programs such as SA.

"I think it's a way for Mr. Gates to keep the money flowing in now that he's saturated the market with his products, and it will hurt many companies who don't upgrade programs extremely aggressively," a user with a large media company based in the Northeast said in the immediate aftermath of Licensing 6.0's introduction in May. "First we lost the home use extension of programs. Now we're losing the ability to upgrade without being in a program that requires a constant outlay of cash."

In contrast to Microsoft's earlier extension of its Licensing 6.0 deadline to February, many users feel that the software giant's latest olive branch overture to customers is more substantive.

"This definitely has more meat to it, that's true," says Christopher DeMarco, a Unix and Windows systems administrator with sysadmin outsourcing specialist Taos. "Giving customers another nine months to plan is only fair, and the changes to the Software Assurance program will be helpful, too. I still don't think that they've addressed some of the underlying problems with Software Assurance, though."

Most users say that SA's biggest problem constitutes what Microsoft claims is also its biggest selling point: Frequent upgrades to new versions of Microsoft software. The problem, users say, is that a program like SA is only of value for IT organizations that regularly upgrade their software infrastructures - on the order of every two years. For other organizations that don't upgrade as regularly, the expenses associated with Licensing 6.0 and SA could be overwhelming.

According to a recent survey conducted by consultancy Giga Information Group in conjunction with Windows systems integrator Sunbelt Software, the vast majority of IT managers -- approximately 78 percent -- upgrade their Office and Windows (client/server) software infrastructures at three-to-six year intervals. Only about 22 percent of IT organizations upgrade their Office and Windows (client/server) software infrastructures every two years or less, the survey found.

Because of this, market research firm and consultancy Gartner Group has estimated that provisions associated with Licensing 6.0 could end up costing customers anywhere from 30 percent to 100 percent more than Microsoft's existing licensing agreements.

"The bottom line is that if you plan to maintain your operating systems current at all times, then the Software Assurance program will save you considerably on costs," suggested Kevin Jones, an administrator with Manufacturers Alliance/MAPI Inc., an Arlington, Va., policy research organization. "However, if you do not plan to keep up with the leading edge operating systems then Software Assurance loses its value."

As a result of the changes to SA, Jones pointed out, existing Office 2000 and Windows 2000 customers could enroll in Licensing 6.0 and upgrade for free to Office XP and Office XP.