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By eweek  |  Posted 2003-08-28 Print this article Print

It has been just over a year since Microsoft officially instituted its much-maligned Software Assurance/Licensing 6.0 volume-licensing programs.

Software Assurance represents Microsofts first major foray into annuity-based licensing. Under the plan, customers are charged a percentage (roughly 30 percent per year over three years) of the total cost of their desktop and/or server wares. In exchange, they "buy" guaranteed maintenance on their software and are supplied with service packs and new releases, as they become available.

But months before the new licensing policies went into effect, customers were grumbling about the terms and conditions that Microsoft was set to impose. A number of customers and market watchers warned the program would result in a number of users paying more for their products.

To attempt to make amends, during the past year Microsoft has gone back to almost every one of its enterprise and mid-size customers — either via its own direct sales force or through its third-party integrators and reseller partners — and asked customers what would lessen their licensing pain.

In fact, since introducing Software Assurance, Microsoft has talked to nearly every customer three to eight times, says LaBrunerie. LaBrunerie estimates Microsoft spent $20 million to reach out and query its customers on their licensing beefs.

In the ensuing months, Microsoft attempted to appease customers by making some of their requested licensing tweaks. On March 1st, for example, the corporate-licensing unit quietly made some changes to its volume licensing contracts. These included expanding the product warranty period from 90 days to one year; giving users more advance notice of a Microsoft software audit (30 days, instead of 15); and indemnifying customers for an amount equal to their software purchase value.

Also in March, Microsoft kicked off "Open Value," a new volume-licensing program for its small/mid-size business customers. Open Value allow SMBs with between five and 250 PCs to spread out their licensing payments in order to ease the burdens imposed by Microsofts Software Assurance/Licensing 6.0 programs.

This is an updated version of an article which appeared in the August 12 issue of the newsletter.


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