Microsoft Licensing Move Could Cut Enterprise Costs

Microsoft's move to change the licensing terms for some of its server software products could reduce costs for some enterprise customers.

Microsoft Corp. has made changes to the licensing terms for some of its server software products, a move that could reduce costs for some enterprise customers.

Under the new licensing model, which takes effect on April 1, enterprises that partition will generally pay only for the processors used to support the software rather than for every processor on the server.

This move by Microsoft on Thursday comes hot on the heels of a recent report by Gartner analyst Alvin Park, entitled "Microsoft Server Changes Could Save You Money." Microsoft released the "First Take" of the report to the media on Thursday.

In the report, Park says Microsofts move could save enterprises money if they use partitioning to segregate different applications running on the same multiprocessor server. "Previously, some Microsoft customers complained about having to license all CPUs on a multiprocessor server even though not all of them access the software.

"This situation arose especially with enterprises consolidating several single- or dual-processor servers onto one larger server containing up to 32 processors as a way to control hardware and systems management support costs," he said.

While the volume-licensing use rights will change for the standard and enterprise editions of eight Microsoft server products, Windows 2000 Server and upcoming Windows Server 2003 products are not included in the list.

Those that can be licensed under the per-processor model are SQL Server 2000, BizTalk Server 2002, Internet Security and Acceleration Server 2000, Commerce Server 2002, Content Management Server 2002, Host Integration Server 2000, Microsoft Operations Manager 2000 and Application Center 2000.

"Microsoft will also extend an option for enterprises with volume-licensing processor licenses for the previously listed products to use the amended use rights. Although Microsoft will give no refunds or credits, customers can reuse freed-up licenses. The changes only apply to per-processor licenses. They do not affect the server/client access license (CAL) model," Park said.

A Microsoft spokesman said on Thursday that the software firm was currently "making every effort to communicate these changes clearly to customers. In an effort to respect our customers needs, we would prefer to communicate to our customer first when any update or change occurs.

"But we also know that there is sometimes much confusion about licensing agreements and wanted to make sure journalists were aware of the facts," she said.

Last August, Microsofts controversial Licensing 6.0 program took effect, under which customers had to sign up for two- or three-year Software Assurance maintenance contracts, which allowed them to receive all applicable product upgrades over that period. Those who refused to sign on will have to pay the full price for future upgrades.

Microsoft executives subsequently admitted that the changes were poorly handled and that small and medium-size companies had been hit with price increases.

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