Microsoft Muses Per-Device Licensing

Microsoft is re-examining its strategy to determine when per-device licensing would make more sense than per-user licensing.

ORLANDO, Fla.—Microsoft Corp. is re-examining its licensing strategy to determine when per-device licensing would make more sense than per-user licensing, CEO Steve Ballmer said today.

Addressing an audience of industry professionals at Gartner Inc.s ITxpo here, Ballmer said that Microsoft wants to establish the right type of licensing for various situations, but it wants to avoid adding costly complexity to the process.

"We agree it would be nice to have a variety of different options. The key question is, how do we do that and not have the level of complexity explode?" Ballmer said. "We have to be very careful not to drive religion."

The Redmond, Wash., software giant recently completed a transition to a new licensing program, in which it sought to simplify agreements but inadvertently ended up costing some enterprises money, Ballmer said. "I guarantee you we know now were not going to simplify anything in way it causes hardships," he said with regard to future licensing changes.

Addressing concerns about network security and the software assurance initiative, Ballmer said that he recognizes the desire and need among enterprises for more continuous value as opposed to "just big lumpy upgrades." In the future, more value will be delivered through tools allowing companies to run "almost a Windows update type of service" inside the firewall, he said. Add-on capabilities as well as major upgrades will also be included in software assurance, he said.

The Microsoft CEO said there will be a major breakthrough for Office products centered around providing new management tools for XML. Innovations will include improved collaboration capabilities, improved information management capabilities, and end user help tools. Also in the near term, Microsoft plans to release upgrades on all major products, including a new Windows release, new server releases, and the first version of a software update technology that will be available only to software assurance customers, he said.

Gartner analyst Tom Austin questioned Ballmer about Microsofts recent unexpected foray into wireless networking products. Tongue in cheek, Austin asked whether the project slipped out without Ballmer noticing, whether it is a new way for Microsoft to generate revenue from patches, or whether the company decided to move into the commodity hardware business. Admitting that the initiative is not his top priority, Ballmer said the company wants to gain experience in wireless modems in the context of its broadband services.

As for the consumer side of the business, Microsoft is growing from the user perspective but not necessarily from the shareholder profit perspective, Ballmer said with characteristic dry wit. The company does not plan to abandon the consumer market, however, because it often affects the enterprise market, he said. "There are a lot of technologies that you can share back and forth," he said, naming spam controls and storage technologies.

Gartners analysts brought up the touchy subject of the software industrys practice of censoring discussion about products through licensing agreements, which they dubbed a "sort of conspiracy of science." Raising a theme they have raised at the ITxpo in previous years, they asked whether Microsoft could take a leadership position and allow freer speech.

"Ive never had a customer ask me that question, to be fair," Ballmer replied, adding that he would look into it again this year as he has done in the past following the ITxpo. "Its called the `cone of silence question inside Microsoft," he said, eliciting much laughter in the auditorium.

Currently, Microsofts greatest challenge is to raise its overall "level of excellence" to meet customer expectations. "The level of expectation that our customers have from us is higher than its ever been," Ballmer said. "When we under-perform, the negative fallout from that kind of performance is worse than its ever been."

Two years ago, the company had to carefully watch the competitive threat from Sun Microsystems, but today it is paying close attention to the WebSphere application environment and Linux, according to Ballmer.

Related Stories:

  • Microsoft Licensing: How Open is Open?
  • Microsoft Tight-Lipped on Licensing Numbers
  • Editorial: Microsoft Must Show Licensing Flexibility