Tech & Work

The bright side of Microsoft's new licensing plan

Microsoft says its new licensing policy will simplify the process and create cost savings for 80 percent of its customers. Whether you believe this or not, now that the deadline has passed, it's time to examine Microsoft's vision for software migration.


By Eric Knorr

Either you did or you didn't. As of Oct. 1, 2001, either you took one of several measures to qualify for Microsoft's new Software Assurance program—and thereby retain your volume discounts on Microsoft software—or you sat tight and postponed your decision until sometime before March 1. If you decided to wait, you'll be paying the full price for software when you do upgrade.

Welcome to Microsoft's era of software by subscription
Who wins and who loses in this new scheme has been debated ad nauseum. Certainly, Microsoft stands to make a whole lot of money for doing relatively little; and its strong-arm tactics may leave many customers so sore that they put off upgrading for years. Some may even look to other vendors. But now that the Oct. 1 deadline has passed, it's time to consider the implications of Microsoft's Software Assurance plan on the future of software.

According to Microsoft, 30 percent of customers with volume licensing agreements (that is, more than five licenses for a given product) already have enterprise agreements that cover all upgrades. In a sense, these customers are already "subscribers" to Microsoft software. So aside from the semantic change from "licensing" to "subscription," what are the tangible differences between the old-fashioned way of buying software and Microsoft's "software as service" rhetoric?

An easier migration process
Microsoft has recently provided some interesting clues. The company has introduced its Volume Licensing Services Web tool. This browser-based service enables volume customers to get a complete snapshot of their current Microsoft software assets—a picture few IT departments currently have. Ironically, this service could be very useful in getting some good numbers on which to base your best choice among Microsoft's new licensing plans.

Of course, a Web tool won't make those who will end up paying more for Microsoft software feel any better. But Microsoft clearly has other Internet-based services in mind. When companies buy into Microsoft's top-end Software Assurance plan, they get continuous upgrades. What's more, the company has promised that these upgrades will be more incremental and more frequent. Charles Fitzgerald, director of business development for Microsoft .NET, has suggested that upgrades will proceed in a manner similar to those of MSN Explorer, in which incremental upgrades download in the background with the user being none the wiser. Fitzgerald notes that since Microsoft created "DLL hell," it is in the best position to know how to do automated upgrades the right way.

Server-based software
Of course, in large enterprises, the problem of software upgrades has already been fixed to a large degree with server-based software deployment and management products, such as Tivoli Software Distribution and Microsoft's own Systems Management Server (SMS). Although the company has made no formal announcements, it hints that its SMS Installer will incorporate new functionality to smooth software deployment.

For a sense of the direction in which Microsoft may go, consider the total service packages offered by outsourced IT providers Everdream and CenterBeam. No, Microsoft won't start selling hardware as well as software by subscription, as these companies do. But the tools these providers use for software upgrading and remote troubleshooting are state of the art, since their very intent is to outsource IT completely. Subscribers to these services already enjoy upgrades in the background, continuous diagnostics over the wire, and so on.

A light at the end of the tunnel
Yes, Microsoft's approach was heavy-handed, but at some point, the switch from software licensing to software by subscription had to happen. The potential advantages of subscription are exciting: easier deployment, improved asset management, better budgeting, and quicker time to market for new technology. Eventually, these benefits may ease the pain for businesses that will end up paying more for software under the new plan—and make good on Microsoft's promise of service-based computing.

What do you think?
Did you take steps to comply with the Software Assurance program? Will your company be better off or worse off under Software Assurance? Post a comment or send us a note.

CNET originally published this article on October 8, 2001.

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