Microsoft Adds Subscription Licensing

 
 
By eweek  |  Posted 2001-05-14 Email Print this article Print
 
 
 
 
 
 
 

In what it's characterizing as a first move toward offering customers the ability to license software as a service, Microsoft Corp. last week added a subscription licensing capability to its stable of volume licensing options.

In what its characterizing as a first move toward offering customers the ability to license software as a service, Microsoft Corp. last week added a subscription licensing capability to its stable of volume licensing options.

The subscription program for EA (Enterprise Agreement) volume licensees takes effect Oct. 1.

Under the program, the Redmond, Wash., company is offering its enterprise users a choice of EA licenses: perpetual or three-year nonperpetual (subscription). If customers want to license some products under perpetual and some under nonperpetual licenses within the same organization, Microsoft is providing that option as well.

Microsoft also lowered the bar for entry into the EA program, dropping from 500 to 250 the number of PCs for which customers need to purchase software in order to participate.

Contrary to earlier speculation, Microsoft is not ending perpetual licenses for its volume licensing customers, said Simon Hughes, program manager with Microsofts worldwide licensing group.

The primary advantages of subscription licenses, Hughes said, are that they will allow companies to treat software costs as operating expenses and, in some countries, reap tax benefits from that method of accounting. Microsoft is also making EA subscription licenses 15 percent less expensive in terms of the upfront amount companies will pay compared with what they currently pay for software licensed under standard EAs, he said.

At the same time, unlike other Microsoft volume licenses, such as Select, Open and nonsubscription-based EAs, the new subscription licenses can be modified once a year (instead of once every two years, as is the case with Open, or once every three years for standard EAs and Select licenses). Hughes said the one-year option is well-suited for companies whose software needs are either abruptly growing or declining.

Microsoft is considering whether adding subscription options for its Select and Open volume licensing programs makes sense and has come to no decision yet, Hughes added. He also said that Microsofts decision to postpone the worldwide rollout of its Office XP subscription program–a move the company made public late last week–was unrelated to last weeks announcement, since the Office XP subscription program was designed for individual users, not business licensees.

Microsoft is expecting that Office XP will be one of the primary products that users will license under the EA subscription program, Hughes said.

 
 
 
 
 
 
 
 
 
 
 

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