Licence to ill

Microsoft has long asked its customers this question: Where do you want to go today? Last week, as the company’s new software licensing program kicked in, customers told Microsoft where it could go.

On Monday, just one week after the launch transition for Software Assurance officially began, the software firm said it would extend the deadline until July of next year. It is also allowing companies still on Office 2000 to enroll in the new program before they upgrade — if they upgrade — to the XP version of the product. This is the second time the deadline has been pushed back; Microsoft had earlier given customers until Feb. 28.

It takes a lot for a company with the market share position of Microsoft to change its mind, but apparently this was one occasion when the chorus of decent could not be ignored. Credit the Giga Information Group for serving as the amplifier for that chorus. The research firm recently conducted a survey that put customer anger into statistics that threatened Microsoft’s bottom line. For example, 42 per cent said their costs for Microsoft products could increase as much as 50 per cent, much higher than the 20 per cent Microsoft had estimated would be negatively affected. Another 36 per cent indicated they would consider alternatives to Microsoft products. This is the kind of objective data we need to see more often from analyst firms.

Microsoft tried to spin it as best it could. “Customer feedback improves Microsoft’s volume licensing programs,” its press release said cheerfully, as though there had ever been some kind of focus group directing this strategy. The company trumpeted its “ongoing commitment to listen to business customers of all sizes,” and basically acknowledged that customers had been rushed into a decision.

In an earlier editorial, I discussed what I believe is the inevitability of programs like Software Assurance to become the dominant means by which companies like Microsoft will pressure their customers to upgrade more often. The extensions granted Monday in no way change that scenario, nor should they be construed as a victory for customer choice.

What does nine months really change? For one thing, it means Microsoft will be pushing customers into Software Assurance during a much-hoped-for turnaround in the IT sector by the second half of next year. It also allows companies some room to rethink their budgeting process before their next fiscal year ends. Now is the time for Microsoft to make use of its vast channel community to help persuade its customers that frequent upgrades are a good idea. These customers should not be easily convinced but demand to see the functionality, security and other improvements that justify an aggressive commitment to keeping their technology current.

There is another way Microsoft might lead its customers into this new era: though the Internet. A few years ago the company piloted an innovative program called Microsoft Licensing On-Line (MLO) which not only offered transaction capability but information resources on piracy and other important licensing issues. For some reason that has never been made clear, the MLO project was abandoned, but recently Microsoft Canada’s director of small business and channels, Dave Willis, said the company may incorporate elements of it in future strategies.

“It didn’t really take off, but that said, we are considering a lot of different ways of using the Internet more for licensing,” he said. “I could see enhancements to the existing programs.”

The irony here is that Microsoft is demanding a faster upgrade path but has been forced to admit that customers will now need more than a year to begin it. But the rules imposed by Software Assurance demand IT departments and the organizations that employ them adopt a more (dare I say it?) “leading-edge” approach to their technology purchases. Though the original changes were announced in May, it may have taken a sharp deadline like Oct. 1 for some customers to realize the full implications. Microsoft has their attention now.

sschick@plesman.com

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