Microsoft Launches Controversial Licensing Program

Microsoft is relaunching a controversial licensing model called Licensing 6.0 that will change the way you buy and license SQL Server. The company is offering deeply discounted promotional prices during the transition period, which ends July 31, so you have about 7 weeks to decide which option best fits your needs. Now is not the time to act like an ostrich and stick your head in the sand. Licensing 6.0 has implications for your short- and long-term SQL Server plans regardless of whether you're using SQL Server 2000, 7.0, or 6.5. You need to learn about Licensing 6.0 and make an informed decision.

Software Assurance, the key component of Licensing 6.0, is Microsoft's business strategy for selling software as a service with a predictable, annuity-based revenue stream. Software Assurance will make SQL Server less expensive for customers who upgrade SQL Server when new versions come out. But Software Assurance will likely be a more expensive option for customers who don't upgrade their SQL Servers when each new version comes out.

I'm still not sure whether Software Assurance is a good, bad, or neutral thing for SQL Server users. This week I'm going to stick to the facts regarding Licensing 6.0's impact on SQL Server licensing. For more information about the licensing program, read "Guide to Licensing 6.0 — Microsoft SQL Server" at The guide contains more details than I can cover here. However, I think the following example of how Software Assurance works with SQL Server will clarify several points about the program.

Let's say you own a single-processor license of SQL Server 2000 Standard Edition that you purchased for $5,000. (The suggested retail price is $4,999, but I'm rounding up to make the math easier.) You decide to enroll in Software Assurance during the transition period, which ends on July 31, 2002. The initial Software Assurance enrollment fee will be 25 percent of your initial license cost, or $1,250 in this example, plus an additional 25 percent fee each year that you decide to renew your Software Assurance coverage.

What do you get for this fee? The Microsoft guide lists several features, but the primary benefit is the ability to install any new SQL Server release that becomes available during the period you're covered by Software Assurance. (I'm not a licensing expert, so I strongly encourage you to review this information with your Microsoft software reseller. Please don't take this column as the final say about pricing information from Microsoft.)

Let's say that July 15 rolls around, and you decide to enroll your current license for SQL Server 2000 in Software Assurance. You would pay $1,250 (assuming a $5,000 price), which would cover you under Software Assurance for 1 year. This fee lets you upgrade to a newer version of SQL Server Standard Edition that comes out before July 15, 2003, without spending any additional money. If Yukon, the next major release of SQL Server 2000, ships before July 15, 2003, you would be able to upgrade without spending any additional money on licensing. You would have gotten a great deal by essentially pre-paying $1,250 for a single-processor Standard Edition license of Yukon that might be worth approximately $5,000. Let's assume Yukon doesn't ship by July 15, 2003. In that case, your $1,250 Software Assurance fee wouldn't have bought you anything. But you would have the ability to continue your Software Assurance coverage by paying an additional 25 percent fee of $1,250 on or about July 15, 2003, which would then cover you through July 15, 2004.

Let's assume that Yukon ships on December 31, 2002 (a date I made up!). You would then have the right to roll out Yukon anytime you wanted to and would have essentially bought a single-processor Standard Edition license of Yukon for $2,500, which is still a pretty sweet bargain. However, maybe it's not a great bargain if you're one of those customers who are still running SQL Server 7.0 or 6.5. As I said, Software Assurance will in general be cheaper for customers who roll out each consecutive version of the product and will be more expensive for customers who skip a release cycle for one reason or another.

Why do you need to make your decision within the next 7 weeks? Let's say you plan to upgrade to Yukon when it ships, and you would like to purchase Software Assurance but don't take action during the Licensing 6.0 transition period, which ends on July 31. On August 1, you would have to buy a new license for your current version of SQL Server, which is $20,000 in our hypothetical example, and you would still have to enroll that license in Software Assurance at the 25 percent fee. In other words, today you can buy Software Assurance as an add-on to your current license, but Microsoft says you won't be able to on August 1.

Do you have to worry about making a decision if you're still running SQL Server 7.0 or 6.5? Absolutely! Before July 31, you can upgrade to SQL Server 2000 through a program called Upgrade Advantage. Upgrade Advantage lets you upgrade to SQL Server 2000 for approximately 65 percent to 85 percent of the cost of SQL Server, based on what license program you're currently enrolled in, and you'll also be grandfathered into Software Assurance for 2 years without having to pay an additional fee. That would get you both SQL Server 2000 and Yukon—assuming that Yukon ships before August 1, 2004, which it almost certainly will. However, Upgrade Advantage ceases to exist after July 31, 2002. Upgrading your copy of SQL Server 7.0 to SQL Server 2000 on August 1 would require you to purchase an entirely new, full-price license for SQL Server 2000. Upgrading to SQL Server 2000 through the Upgrade Advantage program before July 31 would cost you about $3,750, plus you get two years of Software Assurance for free. Waiting until August 1 will cost you $5,000 for the base license and an extra 50 percent of the license for the two years of Software Assurance provided by Upgrade Advantage.

Is Software Assurance right for you? The most accurate answer is, "It depends." Buying Software Assurance or Upgrade Advantage before July 31 is probably a smart move if you ever plan to upgrade to Yukon because Yukon will likely ship within the next 18 months, give or take a few months. Either way, the window of opportunity will close at the end of July. Don't be an ostrich: You need to make a decision now.

Software Assurance is a new way to buy software from Microsoft, but other major database management system (DBMS) vendors have been selling software through similar annuity-based programs for years. I believe that Software Assurance will be a good deal for customers who plan to upgrade to Yukon when it ships because these customers will almost certainly receive a nice discount. However, I have mixed feelings about Software Assurance in general. What's your opinion about Software Assurance? Send your comments to [email protected]. I'll summarize your answers and revisit this topic again in a few weeks.

Hide comments


  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.