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Microsoft Changes Volume Licensing
by Arie Slob
Hello Windows users,
Increases in costs for businesses likely
 On October 1st, Microsoft will change licensing for its largest customers. On that date, Version Upgrades, Product Upgrades, Competitive Upgrades and Language Upgrades will no longer be available. These changes where first announced last May.
Microsoft says that the new licensing terms should "result in a reduction or no change in licensing costs for approximately 80 percent of Microsoft volume licensing customers." Research firm Gartner disagrees. In a publication they estimate that the cost for some customers buying volume licenses for Office XP or Windows 2000 could increase by as much as 107 percent.
Under the old license agreement, companies had more choice. The two most popular volume-licensing options would be either to purchase upgrades through a two year maintenance contract (Upgrade Advantage), or to buy one of four version upgrades (VUP, CUP, PUP, or LUP), the more popular option. Both these volume-licensing options will be replaced with a new program called "Software Assurance".
Microsoft is eliminating a number of (upgrade) options, so customers can no longer choose how often they upgrade their software. The choice is simple: pay an annual fee as part of a two year maintenance contract, or pay full price for upgrades. In the past a lot of customers opted to "skip" an upgrade. So (for example) they upgraded to Office 95, skipped the upgrade to Office 97, and upgraded again when Office 2000 became available.
But the trick with the new "Software Assurance" is that customers have to be on the current software version of the product to qualify for the program. Microsoft extended the date for purchasing the Upgrade Advantage (UA) maintenance offering until 28 February 2002.
According to analysts, licensing costs would go down (by around 19%) for customers who upgrade every two years, but the bulk of customers (particularly Office customers) buy upgrades in a four year cycle. According to Gartner, customers upgrading every four years would see an increase in costs between 68 - 107 percent.
Analysts are saying that Microsoft changes its licensing terms regularly as a way to generate revenue, in a way that they are not being seen as raising prices.
Gartner is advising that customers could possibly save quite a lot of money by terminating their current contract, and entering in a new contract before October 1st.
Rose City Software
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22 Sept. 2001, Vol 4 No. 38
