The way your organization manages its Microsoft licenses is about to change. The software company has overhauled its licensing strategy, and the deadline to sign up for the changes is right around the corner.

After July 31, Microsoft will implement Licensing 6.0. The plan can benefit organizations that upgrade their Microsoft products frequently but may drive up the cost of licensing for slow adopters of new Microsoft products.

The new plan has created a controversy, most of which surrounds Software Assurance, an upgrade maintenance plan. Many Microsoft customers have told TechRepublic they’re unhappy with Licensing 6.0 and Software Assurance. Here’s why.

The main changes
The heart of Licensing 6.0 is Software Assurance, a plan that gives upgrade rights to Software Assurance subscribers. Currently, all existing Microsoft customers can upgrade to new Microsoft products when they are released, paying less for an upgrade than they would for a license for a new product.

After July 31, only customers who subscribe to Software Assurance will have the right to upgrade to new products without buying a new license. Following the deadline, nonsubscribers must buy a new license each time they upgrade.

Gartner analyst Alvin Park has said that Software Assurance is a way to protect the licenses you have now by protecting your upgrade rights. Licensing 6.0 and Software Assurance will not change the validity of the licenses you have now, and you don’t have to do anything if you don’t want to protect upgrade rights on existing noncurrent licenses, Park said. For example, if you own a license for Windows 2000, your right to the Windows 2000 license will not change after July 31.

But if you do plan to upgrade anytime in the next three years, subscribing to Software Assurance is the only way to do so without paying for a new license. And for that privilege, Software Assurance subscribers must pay in advance.

Paying up front
The plan requires that subscribers pay 29 percent of a new software upgrade for each PC under the plan and 25 percent of a new server upgrade annually for three years. For example, let’s say that Windows XP costs $100. At a rate of $29 for three years, an organization will pay $87 per desktop during the three-year term of a Software Assurance contract. You can upgrade at no additional cost while you are paying the three-year annual fee. After the three years are up, you can either resubscribe to Software Assurance or opt out by not renewing the contract.

Software Assurance’s pay-in-advance structure has drawn considerable fire from Microsoft customers because, although subscribers can automatically upgrade to new products, Microsoft has made no guarantee as to how many upgrades it will produce during the first three years of the Software Assurance plan.

“How am I going to make a case for paying full license price for less than full product (i.e., [an] upgrade), plus paying in advance for our next upgrade which I can’t even describe?” wrote one TechRepublic member who said his organization will not move to Software Assurance.

“My company and I have been loyal Microsoft users for many years, but we have decided to look at other options, not only OS, but applications as well,” wrote another member.

How to find more information
Microsoft is educating its customers on the changes through local seminars and online Webcasts. To make your decision easier, TechRepublic has complied the most recent information about the changes Microsoft will implement on July 31. Below is a collection of some of the Web’s best resources about Licensing 6.0 and Software Assurance.
Joe Wilcox, a reporter for, CNET’s online technology news site, has covered the Licensing 6.0 changes extensively. Below are three of his most recent articles about the new licensing structure:

ZDNet’s Tech Update
The Tech Update article ”Mapping business priorities” is not specifically about Licensing 6.0 and Software Assurance, but it does explain how managers should monitor and track their Microsoft licenses. It also suggests how they can determine what they’ll need in the future.

Another Tech Update article, “Microsoft customers balk at licensing program,” explains why some organizations have not and will not sign up for the new plan or Software Assurance.

Also in the article, Gartner analyst Michael Silver says that organizations upgrading to Microsoft Office every three years will pay 33 percent to 77 percent more under License 6.0 and Software Assurance. Organizations that upgrade every four years will pay 68 percent to 107 percent more. The article also explains how Licensing 6.0 benefits Microsoft’s bottom line.

The horse’s mouth
Microsoft has offered a series of live Webcasts between Microsoft representatives and independent analysts regarding Licensing 6.0 and Software Assurance. Two of these seminars are available online.

“Microsoft & Licensing: Get the Facts” was broadcast live on June 25, 2002. The bulk of the seminar contains information about the changes Licensing 6.0 brings to Microsoft’s volume licensing program. Analysts from Gartner, Giga, The Yankee Group, and other firms speak openly about the new licensing plan.

Another online seminar, “An Overview of Microsoft Licensing Programs,” aired Nov. 30, 2001. The seminar provides access to information about Licensing 6.0 and Software Assurance and explains how to find local resources to help you in your decision about 6.0.

The deadline is fast approaching, but the resources listed in this article will give you the background information you need to make the right decision about Licensing 6.0 and Software Assurance.