Microsoft Eyes Pay-as-You-Go Licensing

Microsoft mulls changing its enterprise licensing model from long-term contracts to pay as you go.

Microsoft Corp. officials are mulling potential changes to the companys enterprise volume licensing program that could let large systems integrators and service providers license software on behalf of their largest customers.

Enterprises now must negotiate their own volume agreements with Microsoft, even when the software is hosted and managed by a third party. New solutions, sources said, could allow pay-as-you-go licenses rather than requiring users to pay for and get tied up by a long-term agreement.

Sources said some licensing changes could be in the cards as early as next year, in time for "Yukon," the next version of SQL Server, or by 2006, for "Longhorn," the next version of Windows. A spokesman for the Microsoft Volume Licensing Team, however, said Microsoft has no plans to institute SPLA (Service Provider License Agreement) options into its enterprise agreements "in the imminent future."

But Microsoft CEO Steve Ballmer said he believes such ideas have merit if a win-win arrangement can be forged among Microsoft, outsourcers and users.

Ballmer told eWEEK editors in an interview at the companys Redmond, Wash., campus earlier this month that "weve been under ... a constant issue with outsourcers [about service license agreements]. Right now, the way we work is we own the license and then we sell the license to the customer and it gets managed by the outsourcer."

/zimages/4/28571.gifFor the full Ballmer interview, click here.

Ballmer said he believes that the current model is the right one for Microsoft but that there are outsourcers that want to be able to put the license costs into their fees instead of letting Microsoft have a direct relationship with their clients.

"That issue has existed for a long time," Ballmer said. "Its a very hard licensing problem because we dont want these guys to become just sort of volume aggregators like master distributors of our software. That does not make any sense to us. Its not where real value-add is."

Ballmer did not rebut the possibility that such licensing changes could be under consideration.

"It wouldnt surprise me," Ballmer said, "if there was somebody around the place working on seeing if we couldnt find a win-win for us, the outsourcers and the customers."

Next page: Some customers would welcome SPLAs.