Page 2

Customer challenges—The Microsoft packaged software business model is broken, and Redmonds attempts to fix it thus far havent worked. Peter Gallis story about the woes faced by the Software Assurance program point out the difficulty Microsoft is facing in transitioning customers from individual software purchases to ongoing subscriptions. Click here to read Peter Gallis story "Users Balk at Software Assurance." This is something Microsoft needs to make happen, and customers are predictably loath to sign up for. Microsoft needs predictable, ongoing revenue from enterprise customers. These customers like the pay-as-you-go model and want to hold onto it. They see subscriptions as paying for software in advance whether or not they actually end up using it. So Microsoft foisted SA onto a mostly unwilling body of enterprise customers and then, in the opinion of many, underdelivered. A bad first impression is hard to erase, and leaving a sour taste in the mouths of software subscribers is a major failure. In short: Microsoft must find a way to generate predictable, ongoing revenue from enterprise customers. If not, serious troubles follow in a five-year horizon. Next Page: The Globalization—or Linux—Threat.