Licensing Models Evolve to Better Fit User Needs

Microsoft Corp., IBM and Novell Inc. last week all responded to customer calls that they adapt their licensing models to better reflect the fast-paced and ever-changing technology development world.

Microsoft will now no longer charge users of Windows Server System products in virtual machine environments licensing fees at installation but rather at the time of use, while IBM and Novells SuSE introduced an annual subscription fee for all the servers in an IBM BladeCenter chassis running SuSE Linux Enterprise Server 9.

Click here to read more about Microsofts licensing changes.

Enterprises have long pressured software vendors to change their licensing models to reflect a world that has moved away from traditional desktop PCs and servers.

This disparity between vendors and end-user clients is clearly reflected in a study released last week titled "Key Trends in Software Pricing and Licensing" that canvassed the views of 500 industry executives and was sponsored by the Software & Information Industry Association, Centralized Electronic Licensing User Group, and Macrovision Corp.

The survey found that although more than two-thirds of software vendors have changed their pricing and/or licensing policies during the past two years, just 28 percent of enterprises are satisfied with those strategies, "suggesting that ISVs could do a better job of listening to their customers," the report said.

Novell officials concede that software licensing has been static, being either tied to users or machines. But the definition of those entities is changing. For example, a user can now be defined as a desktop PC, a laptop, a person or a handheld. Those definitions are changing, as are the definitions of servers, which now include clusters, grids and virtual servers. The licensing changes reflect the way vendors are adapting to a changing world, where licensing must be more flexible to accommodate different technology scenarios, experts say.

Chris Burry, technology infrastructure practice director for Seattle-based integration specialist Avanade Inc., agreed, saying that the history of technology is that it tends to advance far more rapidly than the associated business and licensing models of the vendors.

For its part, Microsoft appears to be paying attention to what customers are saying, moving to simplify the licensing for Windows Server System products that are used in VM environments. Customers will no longer have to license every inactive or stored instance of a Windows Server System product. They can now create and store unlimited numbers of instances, including those for backup and recovery, and pay only for the maximum number of running instances at any given time, officials at the Redmond, Wash., company said.

Microsoft is also changing its licensing for future products. Licenses for the upcoming Windows Server 2003 R2 Enterprise Edition, expected to ship later this year, will allow customers to run as many as four virtual instances on one physical server at no additional cost.

In addition, when Microsoft ships the Datacenter Edition of Windows Server "Longhorn," expected in 2007, the license will give users the right to run an unlimited number of virtual instances on one physical server.

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