Microsoft Reconsiders Licensing Plans

By Peter Galli  |  Posted 2002-11-18 Print this article Print

Microsoft is looking at new ways to make its relatively unpopular Licensing 6 and Software Assurance volume licensing agreements more beneficial to the customers most negatively impacted: small and medium-size businesses.

Microsoft Corp. is looking at new ways to make its relatively unpopular Licensing 6 and Software Assurance volume licensing agreements more beneficial to the customers most negatively impacted: small and medium-size businesses.

Some options under discussion within the Redmond, Wash., software developer include additional support for customers as well as free training, the level and extent of which would depend on the actual agreement.

"Talking to customers, particularly those small-to-medium-size businesses, we have found that they want some level of training included as part of their licensing agreement, while our enterprise customers have said they want manageability of their environment," said Mike Sinneck, Microsofts corporate vice president of worldwide services, in a recent interview with eWeek. "We are committed to adding additional value to Software Assurance for all customers."

Microsoft executives all the way to CEO Steve Ballmer have admitted the new licensing plans were poorly presented and negatively impacted some customers. In fact, the licensing plan could well have prejudiced the future product buying decisions of the 20 to 30 percent of Microsoft customers at the SMB end of the market that saw price increases, said Paul Flessner, senior vice president of the .Net Enterprise Server group.

"Out of 50 calls I made to customers recently, I got a couple of pastings about the licensing issue," Flessner said. "But we are being very flexible with those customers who feel they were disadvantaged."

Sources said key Microsoft executives are scheduled to meet next month to try to hash out the specifics of what value they can add to the various customer groups. They will do so aware of the need not to further upset or alienate those customers that are evaluating alternatives.

Nevertheless, customers remain skeptical of the companys motives and say it will take more than platitudes, a few tweaks and a couple of hours of training to make amends.

"These promises of more value are nothing but classic damage control. You affect peoples wallets, and youve got a war, as Microsoft has found out," said John Persinger, an internal network administrator for Source4 Inc., in Roanoke, Va. "They need to realize that their licensing scheme is a joke and that they need to rework it completely to make it acceptable."

Dave DeBona, an IT consultant for a national brick-and-mortar and online retailer, said it was unfortunate that small customers had borne the brunt of the new policy.

"Im not sure offering free training is a valid offset, since in tight financial times, training seems to be one of the first items scrutinized. Reworking the entire license agreement would be more helpful," said DeBona, in Springfield, Ohio.

A midsize-business customer in Illinois, who requested anonymity, said he and a number of his colleagues are actively looking at alternatives to Microsoft software. "I hear the words and the promises," said the customer. "But experience has taught me that Microsoft will overpromise and underdeliver on this, as always."

Peter Galli has been a financial/technology reporter for 12 years at leading publications in South Africa, the UK and the US. He has been Investment Editor of South Africa's Business Day Newspaper, the sister publication of the Financial Times of London.

He was also Group Financial Communications Manager for First National Bank, the second largest banking group in South Africa before moving on to become Executive News Editor of Business Report, the largest daily financial newspaper in South Africa, owned by the global Independent Newspapers group.

He was responsible for a national reporting team of 20 based in four bureaus. He also edited and contributed to its weekly technology page, and launched a financial and technology radio service supplying daily news bulletins to the national broadcaster, the South African Broadcasting Corporation, which were then distributed to some 50 radio stations across the country.

He was then transferred to San Francisco as Business Report's U.S. Correspondent to cover Silicon Valley, trade and finance between the US, Europe and emerging markets like South Africa. After serving that role for more than two years, he joined eWeek as a Senior Editor, covering software platforms in August 2000.

He has comprehensively covered Microsoft and its Windows and .Net platforms, as well as the many legal challenges it has faced. He has also focused on Sun Microsystems and its Solaris operating environment, Java and Unix offerings. He covers developments in the open source community, particularly around the Linux kernel and the effects it will have on the enterprise.

He has written extensively about new products for the Linux and Unix platforms, the development of open standards and critically looked at the potential Linux has to offer an alternative operating system and platform to Windows, .Net and Unix-based solutions like Solaris.

His interviews with senior industry executives include Microsoft CEO Steve Ballmer, Linus Torvalds, the original developer of the Linux operating system, Sun CEO Scot McNealy, and Bill Zeitler, a senior vice president at IBM.

For numerous examples of his writing you can search under his name at the eWEEK Website at


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