Microsoft's License to Confuse

Education. Education. Education

ComputerWire: IT Industry Intelligence

Microsoft Corp has blamed confusion over forthcoming changes to its licensing model for sparking a revolt among enterprise customers, who are threatening to throw out Windows operating systems and applications for cheaper alternatives, Gavin Clarke writes.

The Redmond, Washington-based company told Computerwire it will launch a widespread campaign this month to educate users, press and analysts and win support for its unpopular Microsoft Licensing 6.0 Program. The program is due to take effect on August 1.

Rebecca Le Brunerie, program manager for worldwide licensing and pricing, said: "There's a fair amount of confusion out there. There will be tons and tons of direct mail this month, briefings with subsidiaries, adverts in local papers, seminars."

Licensing 6.0 will fundamentally alter the way in which Microsoft charges large customers. The program will see customers with more than 250 seats pay in three-year cycles, with an option to upgrade at the end of that. Licensing 6.0 replaces existing PC-based licensing and volume-based programs for large customers.

Under Licensing 6.0, Microsoft will introduce Software Assurance. Customers under its Select or Enterprise Agreement programs who also adopt Software Assurance can renew their three-year agreement for reduced cost. Customers who do not pick Software Assurance will renew their Select or Enterprise Agreements at full cost.

The company believes the combination of Software Assurance and a three-year lifecycle for Select and Enterprise Agreement is cheaper for large customers than the current system. Le Brunerie said customers will receive new versions of products under their contracts, so they don't have to buy new software.

"CIOs and IT managers don't want to have the financial spike associated with different product releases. They know that in the next three years they will have the rights to it," she said. "Software assurance is not a requirement. It is upgrade protection. That's confusing users."

License 6.0, though, has proved massively unpopular. Announced in May 2001 and originally due to take full effect on October 1 2001, the program has been delayed until August 1 2002. As that date looms closer, though, a revolt is simmering among customers.

A survey of chief information officers, chief technology offers and chief operating officers at 1,500 at corporations worldwide found 36% are unable to afford the changes. Thirty eight percent said they are seeking alternatives to Microsoft products. Linux, Unix, StarOffice and Novell's eDirectory were most often cited alternatives.

According to the survey, conducted by ITIC and Windows NT and Windows 2000 specialist Sunbelt Software, 37% said they will not adopt Licensing 6.0. Le Brunerie said Microsoft would take no action against such companies, but they stood to lose money as a result.

The three-year licensing cycle has also proved unpopular. The survey found 57% actually migrate products every four to five years, and 90% claimed they would be worse off under Licensing 6.0. Le Brunerie said Microsoft picked the three-year cycle because this generates the maximum return on investment to customers.

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