Looming licensing deadline raises some hackles

Some Microsoft customers, fearing higher prices and too-frequent upgrades, continue to resist changes to the vendor's software licensing system scheduled to start in August.

The new plan asks customers who buy licences in bulk to pay an annual fee that will cover the price of all upgrades for the software they use during the period covered by their contract. Microsoft has argued that the plan will simplify the licensing process for its customers and help them save money in the long term as it rolls out updated products in its .Net software family.

Yet one problem, critics say, is that the plan will put customers under pressure to upgrade their software in step with the release of new upgrades from Microsoft in order to get the full value of the plan. Microsoft typically releases upgrades to its products every 18 to 24 months.

Some customers say they don't want to upgrade their software with each new version released, particularly if the software they have in place is working well.

One IT manager with Telstra (who requested anonymity), said the national carrier would need a lot of good reasons before upgrading to more current versions of Microsoft software.

Telstra has 80,000 machines across 1500 sites nationally on which it runs the full Microsoft Office suite, Exchange, SQL Server and a combination of Windows NT 4.0, Windows 2000 and Windows XP, according to the source.

The source said there would be a "heavy increase" in cost overall if it decided to upgrade its desktop and server platform.

Notwithstanding, he said his department was "reviewing" what software licensing model to adopt, hinting the telco would be "just another end user organisation" ultimately without much power in choice.

Companies that choose not to adopt the new licensing scheme by the enrolment deadline of July 31 face the prospect of higher upgrade costs when they eventually decide to refresh Microsoft's software.

However, customers that don't migrate to the new program by July 31 won't be excluded from the program altogether, but they won't be eligible for a discount that Microsoft is offering to customers who sign on by that date.

Paul Singh, IT manager of book publisher Harlequin Enterprises Australia, said Microsoft is "confusing the industry" with its new licensing model.

"Microsoft doesn't realise that in small environments much time is spent understanding its new policy and trying to comply with it at all times.

"The Upgrade Advantage model, for example, will affect many small to medium businesses as there will be ongoing costs rather than one-time upgrade costs. And while Microsoft says you will get free upgrades for the life of the agreement, there will be few companies that will deploy all upgrades unless there is a major version change. Upgrades cost time and money; they take up IT resources," Singh said.

One of the ways users can prepare for a move to Software Assurance is to buy into the Upgrade Advantage (UA) program.

UA gives users access to all upgrades within the time frame of their contracts. The UA option was scheduled for elimination October 1, 2001, but in response to customer requests, Microsoft extended the option until February 28, 2002.

An informal poll conducted by Gartner, just three months before the July deadline, shows only about 30 per cent of Microsoft customers had signed up for the new licensing plan. Another 30 per cent were still pondering the switch.

"If there's one word that I use to sum up what I'm hearing from customers, it's resentment," said Gartner analyst Michael Silver.

A further study of 1400 Windows customers conducted last month by research firm Information Technology Intelligence Corp (ITIC) and Windows reseller Sunbelt Software, showed that 41 per cent of businesses polled said they lacked the necessary funds to migrate to the new plan, according to ITIC principal analyst Laura DiDio.

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