The licensing modifications could radically change how businesses obtain client-access licenses (CALs) for future Microsoft products. Starting with Windows .Net Server 2003, which is slated for release in April, businesses will have the option of purchasing part or all of their CALs on a per user basis, rather than just per machine.
Michael Leworthy, Microsoft's Windows Server product manager, told ZDNet Australia the company expects businesses to receive the new licensing very positively. Apart from the price conversion, the Australian licensing system will be exactly the same as the US licensing system.
Leworthy said pricing in Australia was still being determined.
Microsoft has also changed its licensing for terminal services--that is, methods for accessing Windows desktop and server applications through terminal emulation--and access to a Web server over the Internet.
"I think Australian businesses will enjoy the new terminal server licensing a lot more [than their US counterparts]," said Leworthy. "We tend to have a lot of people in our organisations who roam around the Asia Pacific, whereas in America they're very [office] centric."
The CAL change comes as Microsoft continues its attempts to repair relations with customers who resisted its new Licensing 6 program. Under that program, which went into effect in August, customers must sign up for two- or three-year "Software Assurance" maintenance contracts to receive upgrades. Research firm Gartner estimates that the new program raised the majority of businesses' licensing fees anywhere from 33 percent to 107 percent.
Yankee Group analyst Laura DiDio estimated that as many as two-thirds of Microsoft customers refused to sign up for Licensing 6, even though they risked paying full price for upgrades later on.
One analyst welcomed the CAL changes.
"This is something customers have been hollering for, for a long time," said Gartner analyst Alvin Park. "It is a positive thing they are offering per-user licenses. This is especially good for people that roam," or use multiple machines, such as a PC in their office and a laptop while travelling, said Park.
Under the current model, a person who connects to a Windows 2000 Server using a desktop PC, a notebook and a handheld could be required to get a CAL for each machine.
"This new model would particularly benefit people that use three, four or five devices," Park said.
But in businesses where several people might share a single computer, the per-machine option would make more sense.
"The per-device license that they've always had will still favour those (businesses) that have more people than they have devices," Park said. "If you're an organisation that has more devices than you have people, you would want the per-user license."
Microsoft apparently plans to apply the new licensing scheme to future products and not grandfather existing applications, Park added. "Others will be added as they roll out new products."
Another big change could cost customers running older versions of Windows more money, unless they move to Windows XP before April.
Under the previous licensing model, Microsoft required a CAL for terminal services only when a customer accessed server software with an earlier version of Windows. So an older Windows NT 4 desktop would require a CAL to access Windows 2000 Server, but Windows 2000 Professional PC would not.
Under the new model, Microsoft plans to require CALs for all Windows desktops accessing terminal services--now under the heading Terminal Server--from Windows .Net Server.
But companies that move to Windows XP Professional before April would receive the Terminal Server CAL at no charge, O'Brien said. "We don't want it to be a situation where customers aren't covered when they already purchased Windows XP Pro."
On the one hand, the change appears generous on the part of Microsoft. But Park noted that it also could be interpreted as a way of "encouraging more customers to upgrade to Windows XP Professional." In the long term, he said, the change would cost businesses more money because they would now be required to have a CAL for accessing Terminal Server.
Pay dirt for Microsoft
Still, the company won't be giving away much in the CAL change, particularly since initially only Windows .Net Server 2003 and Terminal Services would be affected--and not until April.
More than almost any other company, Microsoft has made an art form of wringing money out of every device connecting to its server software, say analysts.
A company might pay for Windows XP, but then pay again for the right to access Windows 2000 Server and on top of that for the Office suite's Outlook e-mail and calendar program to access Exchange Server--after already paying separately for the server products. The same would apply to connecting to other products, such as the SharePoint Portal Server.
"My understanding is that with Exchange, for example, the company makes more money from the CALs than it does from the server (software)," said Paul DeGroot, an analyst with Directions on Microsoft.
"The key to Microsoft's software strategy has always been to create positive feedback loops," said Jupiter Research analyst Michael Gartenberg. "Microsoft has a broad product line, which spans the range from data-centre-oriented server software at the high end to children's software at the low end, and each of these offerings is centered upon or related to the Microsoft Windows desktop operating system."
Microsoft's strategy of integrating products technologically benefits the company from a licensing perspective, too, particularly as the number of server products increases.
"Unless enterprises and consumers begin to adopt other offerings and desist from always choosing a Microsoft solution, this strategy will continue to serve them well," Gartenberg said.
Still, Microsoft can charge companies for any device connecting to one of its server products. Park also warned not infer any broad loosening of how Microsoft views the licenses.
"Client-access licenses are a significant form of revenue for their server products," he said. "Microsoft wouldn't do anything that would risk this revenue (stream)." While praising the CAL changes, he also downplayed their significance for many customers. "I don't know that I agree with Microsoft about the benefits to customers."
