Microsoft forced to extend licensing deadline

After pressure from customers and recommendations, Microsoft has extended the deadline for its controversial software licensing plan and upgrade changes. But analysts say it could more than double the price for some business users.

Companies now have until July 31, rather than February 28, to enter Microsoft's Software Assurance licensing program, which will eliminate some discounts and raise software prices for some of its business customers. Microsoft said it granted the extension in response to customer feedback.

The vendor also announced that customers will no longer be required to upgrade to Office XP to qualify for the plan, which is intended to move Microsoft customers to a long-term model.

Microsoft launched its licensing program -- Licensing 6.0 -- on October 1 with a five-month transition period, but has granted the extension following customer complaints that the period was not long enough.

Gartner analyst, Greta James said the extension was a "welcome relief". But the changes could still end up costing some customers 107 per cent more, she said.

Changes to enterprise licensing options mean customers can no longer buy a single version upgrade to Windows, but have to buy full versions each time they want to upgrade, or sign on to a new licensing option, she said.

Businesses upgrading every three years would have to spend as much as 77 per cent more, while businesses on a four-year upgrade cycle would see their costs rise as much as 107 per cent, under the new licensing scheme, according to Gartner.

"That analysis ignores the 10 per cent price hike Australian users suffered already, when Microsoft adjusted its prices due to the weak Australian dollar," James said.

IDC said the changes target infrequent upgraders, those companies that wait three to four years to upgrade desktop and server products. Organisations that upgrade in this timeframe will see no real benefit while end users who use the Version Upgrade Program option to stay current at their own pace will find the new program makes it cost-prohibitive to upgrade in anything less than two years.

"This is a calculated move designed to corral users into regular, predictable upgrade cycles and even out Microsoft's revenue stream in the process," IDC said.

Microsoft Access/SQL Server/ASP.Net Users Group's President, Adam Cogan, said the changes simplified licensing and upgrades for customers and Microsoft.

"Organisations that upgrade every five years will be hit hardest and find it more expensive. Those that upgrade all the time are getting it cheaper. It gives the slow coaches a bit of a prod. Microsoft is trying to keep everyone current," he said.

This is the second major change to the new program in recent times.

On October 1, at the launch of its original equipment manufacturer version of Windows XP Professional, Microsoft relaxed a licensing restriction, on a practice known as 're-imaging'. This common practice is where a system administrator erases the preinstalled version of Windows and installs a new copy to be consistent with other workstations inside the organisation to ensure each computer is configured to run hardware and software in the same fashion.

The manufacturer version of Windows XP Professional carries an end user licence agreement (EULA) which clears the way for enterprises to re-image workstations through its volume licensing program without paying extra.

The relaxing of Microsoft's reimaging policy comes after criticism from Gartner.

James said in mid-2000 Gartner drew attention to customers' fierce resistance to Microsoft's attempt to charge its customers for the right to re-image Windows workstations. Previously Microsoft allowed these rights for all products bought through volume licensing, under Open, Select or Enterprise programs, but not for the OEM Windows licences or any other OEM licence bought with a PC.

"Pressure from Gartner and customers persuaded Microsoft to change its licensing policies to allow its Select program and Enterprise Agreement (EA) customers to re-image Microsoft products using volume upgrade licensing media bought from an OEM or retailer in September 2000," James said.

"Yet, after this initial change, two significant problems remained," James said. "It left out Microsoft's Open licence customers and Select customers found their Select enrolment had to include the "system" pool of products at some volume discount level to qualify for re-imaging and to receive the volume media needed for re-imaging."

Gartner suggested Open customers pressure the vendor to change its policy, and Microsoft bowed to the pressure.

Now Microsoft will allow its customers to replace the Windows XP operating system preinstalled on a PC with a different copy of Windows XP purchased through a volume licensing program.

Gartner recommends enterprises enter into Select instead of Open agreements where feasible to obtain Select media for use in downgrading.

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