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What the hell is Microsoft's new software licensing programme?

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There has been a lot of fuss made about Microsoft's new software licensing programme recently but following weeks of claim and counterclaim, depositions to government bodies, two delays and plenty of public posturing, if you're anything like us you will be completely confused as to what the hell is actually going on.

That is why we've decided to write a small, informative and mildly entertaining guide to what it is, why Microsoft is doing it, why others aren't and what's going to happen to it. This is it:

Will the scheme cost companies more or less money?
Both, depending on how frequently you upgrade software. If your company has a policy of always having the latest software, Microsoft loves you and it will work out cheaper. If you are running old software and only upgrade occasionally, it will be more expensive (which obviously applies to most small businesses).

How come?
Basically - as Microsoft points out - because it is simplifying its software licence system. Previously (and currently) there was a whole range of bulk discounts on software upgrades. Microsoft is simplifying this down to an annual one-off upgrade fee. At the same time, however, MS is insisting that companies buy new licences every time they upgrade software.

A simpler, cheaper system benefitting those who automatically upgrade their Microsoft software.

But companies are concerned that Microsoft is effectively trapping them (by making it more financially viable) into paying it an annual fee rather than licensing/purchasing its products. Microsoft becomes a software outsourcer rather than a simple supplier. Effectively you are renting software from Microsoft.

Why has Microsoft done this?
Is it because, as it says, customers have asked for it and it makes everything simpler, more predictable and easier to budget?

Don't be bloody stupid

Why then?

Because it makes companies beholden to it

So it makes companies upgrade automatically all the time, making any controlling mechanisms in the latest version (oh look, mummy, it doesn't work with anything else but Microsoft software) a hundred times more effective; and it makes the company more money (£100 now or 11 lots of £10 over the year)?
But that's...

Basic economics, yes. The question is: where did it go wrong?
I know this one. Because while Microsoft claims it has its customers' best interests at heart, it didn't actually ask them about this new scheme and hoped to push it through with the support of its most loyal fans in the IT departments of big business - who, incidentally, have the most to gain out the new system.

So what's going to happen between now and July?
Well, if Microsoft can persuade enough people that it's right, the system will go through despite protests. That is nowhere near decided though. If Microsoft maintains its arrogant approach it may just alienate the people it needs to support the scheme and then we'll see some rapid redrawing of rules.

Will all this encourage take up of Linux and cheaper software?
To a degree. Small companies stand to gain the most by shifting to cheaper alternatives but then there is the magic Microsoft tie-in factor. People know the Office suite - if it's not available on Linux, small companies may consider the extra is worth paying, rather than retrain staff on new packages. In a small company, time taken out for retraining is even more significant.

Does all this have anything to do with Microsoft's .Net vision?
Yes it does. The great advantage - and coincidentally, people's great fear - about MS' .Net idea is that everything is run by Microsoft. It knows so much and is so considerate that it will take all those pesky problems with IT away from your gaze and worry about it itself. Everything fits together; just buy Microsoft.

The licence scheme is the first step in pulling companies IT concerns away from an internal department and into Redmond. Once it is in control of these aspects of a companies business, it might feel free to revise its pricing.

Is Microsoft the devil?
Come on, Microsoft wouldn't be Microsoft if it didn't try these things on every year. ®

Related Stories

UK plc hates MS licence terms (true)
MS prices will 'damage UK business'
MS urged to delay licence (to print money) changes
Upgrade your MS apps before 1 October - Gartner
Put brakes on Windows upgrade escalator, Gartner urges MS
MS doubles prices for enterprise customers

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