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Microsoft's New License Program Worries Users

Many customers doubt change will really save them money.

In a bid to achieve more predictable revenue, Microsoft is altering the way it licenses software. On July 31, the License 6.0 program becomes the only way IT buyers can upgrade Microsoft products without paying for a new license. Some say the change isn't for the better.

Under Microsoft's earlier Version Upgrade plan, customers could upgrade software at a discount whenever they chose. With License 6.0's Software Assurance plan, they pay an annual fee of 25% to 29% of the cost of desktop or server software at the start of each year in order to receive all upgrades over the term of the license.

"If you're a frequent upgrader, you're going to save money," says product licensing manager Rebecca LaBrunerie. That may sound like a good deal, but for companies that don't upgrade frequently, Software Assurance imposes a fee for software they may never use. Also, Microsoft is under no obligation to release any upgrades at all during a user's license term. And License 6.0 requires customers to buy more software over a longer term to get discounts.

Brent Zempel, CIO at Lifetime Fitness Inc. -- Photo by Steve Woit

Lifetime Fitness won't enroll in License 6.0, CIO Zempel says. It will buy new software as needed.
"This is being forced down our throats," says Brent Zempel, CIO at Lifetime Fitness Inc. The Eden Prairie, Minn., health-club operator maintains about 1,100 desktops running Microsoft Office. Zempel says he won't enroll in License 6.0; instead, he'll buy new software as it's needed.

Other customers complain that License 6.0 is so complex that it's difficult for them to determine if they'll save money. The program presents users with at least 24 possible combinations of payment options, price levels, software-maintenance plans, licensing agreements, and customer categories. "It's completely confusing," says Brad Kayton, president and CEO of Paros Software Inc. in San Mateo, Calif., a software development and integration company.

Jim Hatch, CIO at Pactiv Corp., a $2.8 billion packaging provider in Lake Forest, Ill., says he's had it. "I plan on using Linux to evolve my Intel-based systems onto a non-Microsoft environment," he says.

Microsoft says charging customers annual maintenance fees simply lets it do business the way other business software vendors do. It says the program is a good deal, and that companies that use Windows 2000 Server with more than 250 desktops would save up to 50% by enrolling in Software Assurance.

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