Due to customer pressure, Microsoft Corp. has altered its revamped Office XP licensing scheme, giving business users additional time to upgrade their licensing agreements, the company announced Thursday.
When Microsoft launched Office XP in May, it also announced it was to discontinue its former licensing practices by eliminating version upgrades. Users would have until Oct. 1 to upgrade their licensing rights. After Oct. 1, users would have to buy new licenses for Office XP -- at a cost of to US$300 more per user -- if they wanted to have upgrade protection.
The launch of Office XP started the clock running on how long corporations have to extend their old licenses, but Microsoft has now extended that deadline until Feb. 28, 2002.
The transition period for the new licensing scheme, which Microsoft calls its Licensing 6.0 programs, has been slightly extended in two ways, as a result of customer requests, Microsoft said in the statement.
Customers with current licenses for recently released products such as Windows 2000 Professional, Office XP, Windows 2000 server and the .Net enterprise servers now have until Feb. 28 to sign up for Microsoft's Software Assurance program -- an extension of one month from the previously announced deadline of Jan. 31.
More significantly, those who need to upgrade licenses for older versions of Office products have the additional five months to pay for what Microsoft is calling the Upgrade Advantage program, Microsoft said. The Upgrade Advantage gives consumers an upgrade to the current license and extends their Software Assurance program for two years, Microsoft said.
While companies using Office 95, 97 and 2000 need to make upgrade decisions before the Feb. 28 deadline, they don't have to actually deploy the product by that date. Under the Software Assurance program users must have a license to upgrade to the current version of the product, now Office XP, or pay significant costs to get that license.
If customers join Upgrade Advantage before Feb. 28, they have to pay a full retail price of $292 per user, per year, and receive the rights to an Office XP Professional upgrade and up to two years of Software Assurance. But after Feb. 28, companies will have to buy new Office XP licenses for $454. The optional Software Assurance is another $131 per user, per year.
In May, Microsoft announced it intended to eliminate version upgrades, instead pushing a variety of non-perpetual licensing agreements, or limited-use contracts, which Microsoft claims will keep users running the latest software versions. The license upgrade will not be available after the deadline, so corporations are in effect being forced to figure out by Feb. 28 if they want to spend money now on protecting license upgrades or just upgrade to Office XP altogether.
And to further tempt corporate users to just upgrade to Office XP, Microsoft is offering a reduced price for Office XP until Oct. 1.
The decision to delay an upgrade could mean $1.5 million in extra licensing costs for an organization with as few as 5,000 seats of Office. In addition, customers running Office on Windows 95 will have to upgrade their operating systems because Office XP does not run on that platform.
But consumers and analysts reacted quickly to the change, accusing the software giant of simply attempting to keep its revenue model afloat with costs that could force corporate customers into paying an additional 30 percent to 70 percent each year.
In late May, a Dutch group of system administrators, The Netwerk Gebruikersgroep Nederland (NGN), sent Microsoft an open letter to complain about the costs of the new licensing scheme, which would see 86 percent of its members paying higher yearly costs.
At the core of their complaint was the elimination of Version Upgrades (VUP), which the group -- an organization of 3,700 IT and network professionals from small and large organizations in the Netherlands -- said was the cheapest mechanism for enterprises upgrading less than twice every two to three years.
"We find it unreasonable that existing upgrade rights will default after Oct. 1, and a price hike that large is unjustified. The VUP should remain an option," said NGN chairman Vincent Everts in a May 25 interview with the IDG News Service.
Making no reference to the current controversy over higher costs, Microsoft said in the statement Thursday that it was offering the license registration extensions so as to allow companies to include the costs of any upgrades or new purchases into their budgets for the next calendar year.
Microsoft said that the extensions in the licensing agreements will affect Open and Select customers, covering five-plus seats per office and 250-plus seats per office respectively. The extension will not cover Enterprise Agreement or Enterprise Agreement subscription customers due to the fact that those agreements already have the Software Assurance benefit.