Microsoft Customers Criticize Its Licensing Scheme

By Peter Galli  |  Posted 2005-06-07 Print this article Print

In a Q&A session at Tech Ed, four enterprise customers are upfront about Microsoft's enterprise licensing schemes.

ORLANDO, Fla.—Microsoft Corp. used its Tech Ed conference here Monday as a platform for some of its large enterprise customers to discuss their experiences with the company. The tables, however, were turned when someone in the audience asked the panelists what they thought of the companys enterprise licensing schemes. Frank Gillette, chief analyst at Forrester Research Inc., was moderating what had been a very upbeat and pro-Microsoft discussion, where four enterprises shared their positive experiences using Microsoft technologies. Then came the question-and-answer session and the issue of licensing costs.
Read here about how users balked at renewing their Licensing 6.0 and Software assurance plans.
Robert Fort, director of information technology at Virgin entertainment Group Inc., in Los Angeles, said that if Microsoft would cut its licensing fees in half "that would be great. The negotiations around the volume licensing agreement were rigorous and difficult and changed the nature of our relationship with them," he said. The Microsoft salespeople are "a tough group and not very flexible. At the very least they need to be friendlier and more flexible," he said. Tim Kelly, director of distributed technology at Total System Services Inc., in Columbia, Ga., said that while the company has managed to get some good concessions from Microsoft around extending the lifecycle of products, "when you are negotiating contracts worth $8 million there are not a lot of smiles around," he said. Larry Berger, manager of computer operations for Nissan North America Inc., told attendees that it took them some nine months to go through the volume licensing process and, while Microsoft was patient and helpful, the company closely looked at how it expects its technology needs to change over the next three years. "If you are not going to be upgrading to a new operating system or making some other significant change over the next three years, you need to look very closely at whether you need such a contract. In our case, nobody was really happy with the end price," he said. The only panelist not to weigh in on the licensing issue was Ross McKenzie, director of information systems at the John Hopkins Bloomberg School of Public Health in Baltimore, saying that as a representative from an educational institution who has access to special low Microsoft educational pricing, "Im not saying a word. I know when to keep quiet." Read here about how Microsoft has been beefing up its enterprise licensing programs. Virgins Fort said the company uses Windows Server 2003, Exchange 2003, BizTalk 2004 and SQL Server, including analysis server and pivot tables. Its end users have no access to data as it is running a transactional data system and reports have to be done by hand. Virgin has implemented a real-time data warehouse that allows stores to key performance indicators every 15 minutes versus the week to 10 days it took previously. Total System Services has a core application known as TSYS ProphIT, a Web-based process management system that provides direct access to account information and other system interfaces to help streamline an organizations business processes. TSYS ProphIT uses Microsoft .Net, Visual Studio 2003 and SQL Server. Nissans Berger said his company had a lot of old technology in its environment while needing a lot of collaboration, and it did not have the tools for that, he said. John Hopkins Bloomberg told the audience that Microsoft Exchange is their fifth e-mail system in 10 years. It has bounced from a mainframe system to Novell Inc.s GroupWare to Unix, at which point it lost the ability to have an integrated calendar. "Then, some two years ago, we looked at mail solutions from Sun [Microsystems Inc.] and Microsoft, and we chose to go with Exchange, which we have been running for a year now," he said. Red Hat also has customers share success stories. Click here to read more. With regard to Microsofts push toward "integrated innovation" and vendor lock-in, TSYS Kelly said that in the financial and banking world everything is standards based, so the issue of interoperability is diminishing. But Nissans Berger was more pointed, saying that, in the past, it was problematic when Microsoft integrated solutions as this increased the risk that this would crash rather than fix the solution it was designed for. Check out eWEEK.coms for Microsoft and Windows news, views and analysis.
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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