Microsoft is facing pushback from volume licensees whose three-year Licensing 6.0 and Software Assurance plans are about to expire.
Many of the Redmond, Wash., companys volume license customers, whose contracts have expired or are set to expire, are questioning the value they got from the programs and whether they should renew.
At the same time, another Microsoft Corp. licensing program, Upgrade Advantage, will reach the end of its life this month when the last customer contracts expire. Those customers can continue to use the software they acquired under the program, but they will not get further product upgrades and will now have to pay for full versions of Microsoft products or sign up for Software Assurance.
A falloff in renewals could put a crimp in Microsofts SA goal of allowing customers to spread out the payments for their volume software over several years—and giving Microsoft a stable annual revenue stream.
Steve Dunton, chief technical officer at ActivAeon XA, a division of Techtonik Ltd., in Sunderland, England, and a Microsoft partner, said many of his customers are disappointed with their Software Assurance experience because of the many delays in the release dates for several Microsoft products.
Dunton said he expects that many enterprises will not renew their agreements and pay full price for future upgrades instead. Those enterprises that do renew plan to negotiate much harder on price, he said.
Some Microsoft users were expecting new desktop and database product upgrades during their first Software Assurance contract. But the company has pushed back several products, including the next version of the Windows client (code-named Longhorn, now due in 2006) and server (expected in 2007) and the upgrade to SQL Server (code-named Yukon and slated for release next year).
Enterprise customers such as Chuck Kramer, chief technology officer for Social & Scientific Systems Inc., in Silver Spring, Md., are concerned about the product delays. “Much of our decision to go with Licensing 6.0 and Software Assurance was based on pure economics and Microsofts anticipated timeline,” Kramer said.
“That has borne out to be an incorrect calculation on our part. We are not very pleased with the Software Assurance program. We dont feel it has been a good value for us overall.”
Another customer, David Robert, a systems manager for a global consulting and engineering company in Cambridge, Mass., questioned the value his company has received under Licensing 6.0. “You still have to pay Microsoft one way or the other. Im not sure the value of the new licensing model has been realized,” he said.
Others, such as Jack Beckman, an application programming manager in Southfield, Mich., see no reason to sign up for another such agreement, given the lack of value he feels his organization has received. “Since it appears well get no upgrades from our current agreement, I dont see much point in entering into another one,” Beckman said.
In Microsofts defense, Cori Hartje, the companys director of marketing and readiness in the worldwide licensing and partnering program, said she is upbeat about renewals for SA, adding that, so far, 66 to 75 percent of those with enterprise agreements are renewing.
Hartje said no company guarantees upgrades and that Microsoft provides things such as security patches and updates for free. “We also certainly do not build products to fit into any particular upgrade cycle,” she said.
But some buyers said SA is not appropriate for customer needs and should be changed. “Executives who stay awake at night fantasizing about thousands of customers who will upgrade multiple systems and applications in a three-year period are doing just that—fantasizing,” said John Persinger, an internal-network administrator for Source4, in Roanoke, Va.
“We understand that Microsofts solutions continue to benefit them more than us, and our goal is technology for the good of the business we run rather than technology for technologys sake.”