Microsoft manipulation

IT HAS BEEN more than a year since Microsoft announced its “Licensing 6.0” changes, including the Software Assurance maintenance program. As the July 31st deadline for customers to decide their volume-license strategy approaches, however, the confusion and angst readers are expressing on the Gripe Line about the program is only getting worse.

At this late date, I think most long-time users of Microsoft’s volume-license offerings have decided what to do, albeit many are still quite unhappy about it. After all, in our recent discussions about maintenance programs in general, some readers have been upset with maintenance programs that cost 20 percent of the product price. Software Assurance costs 29 percent for desktop software and doesn’t include support — a price surely no one but Microsoft could get away with. As one reader noted, “Microsoft’s Software Advantage falls in the pseudoextortion family — ‘Buy an upgrade now, or we’ll act like you’ve never purchased before.’ ”

As July 31st approaches, however, I’ve been hearing from more and more small-business customers who in the past have purchased little or no software through Microsoft’s volume-licensing programs. Only dimly aware of what Software Assurance is, many have nonetheless gotten the impression from Microsoft or their resellers that the deadline holds menace for them if they don’t respond.

“Having been totally confused by the new rules, and since the Microsoft Web site that explains the new policies didn’t really help, I signed up for a local three-hour Microsoft seminar on the topic to try to clear things up,” wrote one reader. “The general idea of paying a small annual fee to get all upgrades wasn’t really that offensive to me, so I went in with a fairly positive attitude on the policy. The problem is that the longer I sat there and the more I began to understand the rules, the less and less favorable my opinion became of the plan.”

Even after devoting considerable time and effort to trying to understand what Microsoft’s licensing changes will mean to them, this reader and others had come to believe that all product upgrades, including retail upgrade packages for Windows and Office, were going away as of July 31st. While it was my impression that retail upgrades were not affected by the changes, I couldn’t find any confirmation on Microsoft’s Web site. When I called them, though, Microsoft officials did confirm that retail upgrades for Windows and Office will still be available after July 31.

“There is a fair amount of confusion on this, and we own that,” acknowledges Rebecca LaBrunerie, program manager of Microsoft’s worldwide licensing group. “One of the misperceptions is that customers cannot continue to buy retail upgrades or OEM licenses after July 31. Those are still viable options. These customers should do the business analysis to decide if Software Assurance is right for them. If at any point the answer is no, they can take a look at other options, including retail upgrades, OEM licenses, or just doing nothing for the time being.”

Of course, it’s hard for small businesses in particular to do that business analysis when they sit through one of Microsoft’s licensing Webcasts or even attend a half-day tutorial session and still come away not knowing some basics. Putting prices on the numbers is hard to do, because the actual discount depends on the size of your order, the eagerness of your reseller, etc. But having spoken with Microsoft and several analysts who know this stuff as well as anyone, let me see if I can make things at least a little clearer. Be warned that the following contains forward-looking, backward-looking, even sideways-looking statements provided on an as-is basis, not to be relied upon for any personal, legal, financial, or crossing-the-street decisions without consulting an appropriate professional who makes a lot more money than I do. Kids, don’t try Software Assurance at home.

In my humble opinion, small businesses that have historically relied on retail upgrades and OEM licenses from hardware purchases for most of their Microsoft software are probably best off continuing to do so. Yes, there are many caveats, particularly if you’re really enamored of having the latest versions of Windows and Office on all your systems right away. But if that’s the case, you should already have an Open or Select agreement as well as Upgrade Advantage, the maintenance program that Software Assurance is replacing.

Assuming Microsoft sticks to its guns, signing up for volume licensing and Software Assurance will be prohibitively expensive for most small businesses after Upgrade Advantage disappears on Aug. 1. One big reason is that OEM licenses of Office and even Office XP become totally useless for Software Assurance purposes. But even if you sign up for Software Assurance before then, the price breaks most small businesses will get are probably not big enough to justify the upfront expense and long-term commitment.

Beyond price, the one thing that might make it worthwhile to at least sign up for an Open Business account is the fact that volume-license customers get versions of Microsoft products with a volume license key instead of product activation. Getting a version without product activation is an important benefit, all right, but keep in mind, it’s one that Microsoft can withdraw at any time. Customers have to make a commitment to Microsoft — it doesn’t work the other way around.

It’s ironic, in a very sad way, that what many customers will see as the greatest advantage of Microsoft’s volume licensing plan is the removal of a usage limitation that didn’t even exist a short time ago. But using licensing as a way of forcing customers to pay more money for less functionality is what passes for innovation at Microsoft these days.