MS to hike enterprise pricing 50 per cent – Gartner

A Gartner report just released warns that the cost of Microsoft software to enterprises will go up 50 per cent by 2002. The increase will be not from increased prices, but from changes in the terms and conditions that will adversely impact major users. The report claims that Microsoft will start charging 20 per cent more for non-perpetual licences. This is of course the holy grail for Microsoft -- to get as many guaranteed revenue streams as possible. It failed to achieve this with MSN, and with financial transaction fees, but there is no holding back stock-option-incentivised Microsoft operatives. Blowing away the mist, this claim is nothing but a guess. John Connors, Microsoft vp worldwide enterprise group, said at Gartner's ITexpo in Orlando that Microsoft hadn't yet announced W2K pricing, "but like the rest of our software, it will be very reasonable". Of course. Connors did admit that Microsoft is in the process of "simplifying" the licensing and pricing of its software, which sounds like a euphemism for an effective-price hike. According to Gartner, Microsoft is cutting back on home-use entitlements, concurrent use entitlements, and tightening up on maintenance deals, with the net effect being an increase of 224 per cent over five years in a 5,000 desktop situation. Nor is Gartner sure that Microsoft will be able to manage eight operating systems in 2002. These suppositions, which have much in common with water-cooler talk, depend on there being no negative outcome in the Washington trial. That is a considerable premise: in any interim injunction pending an appeal, there is likely to be a freeze on many practices, and the chance of Microsoft being able to slip through such an increase -- a prima facie demonstration of monopoly pricing -- is not great. If it were true, it would be good for Microsoft's office suite rivals. It might well cause some considerable changes in corporate purchasing strategy: those making such decisions often know nothing about software of course, but they do understand the numbers. ®