Microsoft bends on software license deadline

Companies under financial pressure by the October start date for Microsoft's new software licensing program say the vendor agreed to push the deadline for enrollment out another five months in response to threats of platform defections and other protests.

Microsoft's initial plan, announced in the US in May, was essentially for companies with Open (five or more licenses) and Select (250 or more licenses) volume-licensing agreements to sign on for Microsoft's new upgrade program, Software Assurance, by October 1. But customers squawked because the plan, which replaces all other upgrade options and requires a yearly fee, can be a multimillion dollar decision - and one that they would rather not be forced to make by fall.

The new deadline of February 28, 2002 gives customers more time to contemplate their software strategy as they determine 2002 budgets.

Microsoft also is helping by telling IT executives that the desktop and server editions of Windows 2000 will be considered "current versions" of software when the Software Assurance deadline hits. That is significant because companies must be on current versions to enroll in the program, but on February 28, Windows XP and Windows.Net will likely be the most current versions.

During the past two weeks, Microsoft began telling resellers and large customers about the deadline change, realising it had misjudged the impact of its original plan on IT shops.

Companies considering an upgrade after the October 1 deadline to the recently released Office XP faced the prospect of spending as much as $US300 more per user to purchase new licenses for the productivity suite. Those costs were about double the money the same company would spend to upgrade before the October 1 deadline.

"This is the largest price increase that Microsoft has ever had," says Chris LeTocq, principal analyst with Guernsey Research. "Enterprises are going to ask, 'Why should I pay for upgrades that have little value for me?' This licensing model will force IT to take a long look at what is on the desktop and a lot will say, 'Hey, e-mail does the job.' Applications like Office are on the bargaining table over the next five years for IT."

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