Microsoft Holds the Line on Server Prices

By Peter Galli  |  Posted 2003-03-10 Print this article Print

Some users disappointed prices for Windows Server 2003 weren't cut, may wait before upgrading.

Some Microsoft Corp. customers who run Windows server software are expressing disappointment over the companys pricing plan for the upcoming Windows Server 2003.

Considering the tough economic environment and cuts in corporate IT spending—as well as cheaper hardware platforms—some customers expected the Redmond, Wash., company to announce lower software prices. Those customers, who may not yet have signed up for Microsofts volume licensing and Software Assurance agreements, say they may wait before upgrading to the server software.

Bob OBrien, Microsofts group product manager for Windows Server 2003, explained that the prices for Windows Server 2003 are essentially unchanged since the year 2000.

"Microsoft is also trying to line up all its pricing to follow the same corporate pattern," OBrien said. "All of the standard discounting schedules for volume server licenses now match the rest of the company."

OBrien said that Windows Server 2003 prices are actually lower in real terms and that the software will provide rapid return on investment.

But some customers are not convinced. Dave DeBona, a technical consultant for a retailer based in Columbus, Ohio, said total-cost-of-ownership numbers are "basically the smoke-and-mirror effect," although he said he is happy the prices did not increase.

"I believe the important message is that prices have not gone up," DeBona said. "Thats a nice change in an economy where my gas bill has increased three times in six months. Im happy to hear that Microsoft has standardized its pricing model."

Other users are not rushing to upgrade. Jack Beckman, an application programming manager for Service Centers Corp., in Southfield, Mich., said the companys upgrade from Windows NT 4.0 to Windows 2000 is only 70 percent finished. "So I dont see us rushing off to go to Server 2003 right away," Beckman said. "We still have all these copies of Windows 2000 Server we bought we havent installed yet."

Some customers are also still not happy about having to pay for a Terminal Server CAL (client access license) for all client devices that access the server, regardless of which Windows version is used.

To encourage users to upgrade, Microsoft is offering a free Windows Server 2003 Terminal Server CAL to customers who already have Windows XP Professional, whose Windows desktops are under an Enterprise Agreement or Software Assurance plan, or who buy Windows XP Professional before the server is available.

"We recently set up a TS Server, and I dont see us being in a big hurry to go from the free CALs on 2000 Server for 2000/XP clients to $130-plus-per-client CALs on 2003 Server," said Beckman. "While hardware prices keep dropping in price, software keeps going up."

Latest Microsoft News: Search for more stories by Peter Galli.
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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