Kearn's column: Tracking Microsoft's pricing

A year ago in a column titled "Microsoft's hidden price increase", I warned you to beef up your software budget in light of Microsoft's plan to move away from concurrent usage licensing.

Under the old concurrent usage licensing plan, you only needed 10 licences if you had 100 people using PowerPoint occasionally, but no more than 10 using it at any given time. The new plan means you need 100 licences under the same conditions.

A recent Associated Press story indicated that technology managers are now starting to feel this grab for their wallets. And Gartner Group has reported that enterprises should expect to pay 50 per cent more for Microsoft software over the next three years - even if the per-user charge remains constant - simply because of changes to volume purchasing contracts. Couple these findings with today's faster pace of upgrades and you're paying more for your licences and more often.

Also worth noting is the method Microsoft uses to force you to upgrade. Files created with the newest versions of the applications can't be opened by the previous version. Under Microsoft's latest pricing scheme, you pay for upgrades to every user whether or not you install them, so you might as well upgrade.

Let's summarise: In 1991, Microsoft bundled some applications together and called them Microsoft Office. This essentially got you four or five applications for the price of two. But you got an individual licence for each application, and they were concurrent use licences. You could save further by having one copy of the software media (floppy disks at that time) and multiple 'licence packs,' which allowed you to install the diskettes multiple times. The offer looked good. The pricing, coupled with the poor quality of WordPerfect for Windows 1.0 and Quattro Pro for Windows, pushed Word, Excel and the rest of the Office products to the top of the applications market.

Next, Office became a single-licence product. There was no more breaking apart the package to give one user Excel and another PowerPoint, though you could still base your licence count on concurrent usage.

Now there's no more concurrent use. You need an Office licence for each user in your organisation. Now that Microsoft owns the office suite market, you'll have to pay more, and pay it more often.

Sounds like predatory pricing to me.

Dave Kearns, a former network administrator, is a freelance writer and consultant in Austin, Texas. He can be reached at

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