Microsoft Postpones Controversial Licensing Program

Bowing to the demands of outraged enterprise buyers, Microsoft has once again postponed its controversial new licensing program, which seems to raise costs for just about all of the company's corporate customers. Of course, Microsoft isn't positioning the delay that way: The company's release about this topic seems to suggest that, given a little more time, its customers will come around to the new Licensing 6.0 scheme. But the reality is that a groundswell of opposition to Microsoft's new licensing plan has erupted, and many corporations are starting to look at alternatives.

"Customers have told us that Licensing 6.0, our improved licensing program, which we launched on October 1, 2001, is a significant change, but that our original 5-month transition period was just not long enough," said Bill Landefeld, who heads Microsoft's worldwide licensing and pricing. "Given the economic climate today, it's clear our customers were right. After listening to customers, Microsoft is extending the launch transition period to allow customers sufficient time to review their existing licenses, evaluate the new options, and decide how to take advantage of Software Assurance." So the company will extend the current licensing period to July 31, 2002, a fairly long extension.

The problem with Microsoft's new licensing scheme is that it requires corporations to essentially purchase maintenance contracts that automatically upgrade them to new Windows and Office versions as they appear. And Microsoft has axed the previous scheme of providing better deals to those companies that purchase licenses in bulk, leading to much higher costs for many corporations. Critics of the plan say that Microsoft is trying to fleece its customers by requiring them to pay a software-subscription fee on an ongoing basis because the plan forces companies to upgrade to the latest versions of its software. This plan is at odds with past behavior; most corporations have upgraded every 3 to 5 years, not every 2 years as Microsoft now requires under the new licensing policy.

A recent Giga Information Group and Sunbelt Software survey found that more than 80 percent of technology professionals have negative feelings about Microsoft's new licensing because it will raise their costs; however, Microsoft said that only 20 percent of its customers will experience higher costs. And more than 35 percent of the respondents said they were now considering Microsoft alternatives.

Not coincidentally, Microsoft competitors, especially Sun Microsystems, are ready and willing to accept any recalcitrant Microsoft customers with open arms. Sun announced yesterday that the company is lowering the cost of its Web-server solution (see the article below), and last week Sun previewed its upcoming Microsoft Office XP-compatible application suite, Star Office 6, which offers a compelling level of functionality and interoperability with Office file formats. And, of course, the open-source Linux platform is also available, offering low initial costs and a perceived sense of security and stability.

TAGS: Windows 8
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