After July 31, Microsoft will implement Licensing 6.0. The plan can benefit organisations that upgrade their Microsoft products frequently but may drive up the cost of licensing for slow adopters of new Microsoft products.
The new plan has created a controversy, most of which surrounds Software Assurance, an upgrade maintenance plan. Many Microsoft customers have told TechRepublic they're unhappy with Licensing 6.0 and Software Assurance. Here's why.
The main changes
The heart of Licensing 6.0 is Software Assurance, a plan that gives upgrade rights to Software Assurance subscribers. Currently, all existing Microsoft customers can upgrade to new Microsoft products when they are released, paying less for an upgrade than they would for a license for a new product.
After July 31, only customers who subscribe to Software Assurance will have the right to upgrade to new products without buying a new license. Following the deadline, nonsubscribers must buy a new license each time they upgrade.
Gartner analyst Alvin Park has said that Software Assurance is a way to protect the licenses you have now by protecting your upgrade rights. Licensing 6.0 and Software Assurance will not change the validity of the licenses you have now, and you don't have to do anything if you don't want to protect upgrade rights on existing noncurrent licenses, Park said. For example, if you own a license for Windows 2000, your right to the Windows 2000 license will not change after July 31.
But if you do plan to upgrade anytime in the next three years, subscribing to Software Assurance is the only way to do so without paying for a new license. And for that privilege, Software Assurance subscribers must pay in advance.
Paying up front
The plan requires that subscribers pay 29 percent of a new software upgrade for each PC under the plan and 25 percent of a new server upgrade annually for three years. For example, let's say that Windows XP costs US$100. At a rate of $29 for three years, an organisation will pay $87 per desktop during the three-year term of a Software Assurance contract. You can upgrade at no additional cost while you are paying the three-year annual fee. After the three years are up, you can either resubscribe to Software Assurance or opt out by not renewing the contract.
Software Assurance's pay-in-advance structure has drawn considerable fire from Microsoft customers because, although subscribers can automatically upgrade to new products, Microsoft has made no guarantee as to how many upgrades it will produce during the first three years of the Software Assurance plan.
-How am I going to make a case for paying full license price for less than full product (i.e., [an] upgrade), plus paying in advance for our next upgrade which I can't even describe?" wrote one TechRepublic member who said his organisation will not move to Software Assurance.
-My company and I have been loyal Microsoft users for many years, but we have decided to look at other options, not only OS, but applications as well," wrote another member.
How to find more information
Microsoft is educating its customers on the changes through local seminars and online Webcasts. To make your decision easier, TechRepublic has complied the most recent information about the changes Microsoft will implement on July 31.
The horse's mouth
Microsoft has offered a series of live Webcasts between Microsoft representatives and independent analysts regarding Licensing 6.0 and Software Assurance. Two of these seminars are available online.
-Microsoft & Licensing: Get the Facts" was broadcast live on June 25, 2002. The bulk of the seminar contains information about the changes Licensing 6.0 brings to Microsoft's volume licensing program. Analysts from Gartner, Giga, The Yankee Group, and other firms speak openly about the new licensing plan.
Another online seminar, -An Overview of Microsoft Licensing Programs," aired Nov. 30, 2001. The seminar provides access to information about Licensing 6.0 and Software Assurance and explains how to find local resources to help you in your decision about 6.0.
The deadline is fast approaching, but the resources listed in this article will give you the background information you need to make the right decision about Licensing 6.0 and Software Assurance.
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©2001 TechRepublic, Inc.
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This appears to be a blatant attempt by Microsoft to corner the market. And indeed a very smart strategy.
I would be grateful for feedback on my comments as I am about to pose a few questions and please excuse my lack of knowledge where I have made incorrect assumptions.
Consider the .NET development. It appears to offer programmers a freedom unheard of prior to its existence. Will development on .NET platform run exclusively on Microsoft OS? And if so, does this mean that it could spawn a generation of developers who can only develop on Windows OS? Would this then reduce the 'mindshare' of developers who develop for opensource and therefore further erode any position it has in the market?
If open source does 'go under' (not in the business sense but in the sense of its usage) and Microsoft manage to subdue customers to their licensing plan, will this not mean that they will have monopolised the market and made demand for their product inelastic? Will this then give them license to charge virtually anything they like for their product due to the lack of an alternative? What will it mean to the privacy of information if almost all communication of the internet has the microsoft stamp on it?