Microsoft amends new license plan -- for some
- By John K. Waters
In an effort to discourage its customers from jumping onto the open-source
bandwagon, Microsoft unveiled plans last week for a new licensing option.
Scheduled to launch early next year, the Open Value plan will allow small and
medium-sized customers (those with between five and 500 PCs) to spread payments
over a period of three years for purchases of software products such as the
Windows OS and MS Office.
The Open Value pitch is part of the Redmond, Wash.-based software maker's
Licensing 6.0 enterprise licensing program, which the company instituted last
summer, generating mixed reviews from customers and market-watchers. That plan
raised licensing fees for the company's business users from 33 percent to 107
percent, according to analysts at Stamford, Conn. market research firm Gartner
Inc. Licensing 6.0 participants are required to pay an up-front fee in addition
to annual fees over the life of two- or three-year contracts.
Many of Microsoft's smaller customers resisted Licensing 6.0, with its
''Software Assurance'' program. That program requires buyers to commit to
multi-year maintenance contracts, which, in effect, lock them into the Microsoft
camp. Under Microsoft's older Licensing 5.0 program, customers could buy
upgrades at any time. These so-called ''version upgrades'' are not available
under Licensing 6.0, and some customers have balked. According to analyst
reports, nearly two-thirds of them either rejected the plan or bought partial
upgrades under the older Licensing 5 program.
The new plan is designed to take some of the financial pressure off the
little guys and keep them from opting for ''Lindows'' and other open-source
alternatives, which are less expensive than Microsoft's products. Making such a
switch would be tougher for large enterprises with tens of thousands of users,
but small companies are lighter on their feet, which makes open source a real
The Open Value program has been compared to the ''zero-down'' financing
currently offered by automobile dealers throughout the country, who are
struggling to attract buyers in a down economy. In fact, Microsoft is making a
very similar no-money-down offer to some customers right now, through financing
programs set up by outside creditors, according to the company.
According to the program manager of Microsoft's worldwide pricing and
licensing group, Rebecca LaBrunerie, the new licensing option could save small
business customers as much as 29 percent on desktop software costs, and 25
percent on server software costs over a three-year period.
The Open Value plan will be available in North America early next year,
according to LaBrunerie. According to a recent Gartner Inc. research note, a
similar program was launched in Europe, the Middle East and Africa last
John K. Waters is a freelance writer based in Silicon Valley. He can be reached