Article

Microsoft to offer new licensing option for small, midsized shops

Margie Semilof

Microsoft this week started readying its sales channel for some new licensing options for small to midsized customers. The plan will kick in next spring.

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    IT shops with five to 500 PCs will have an option called Open Value, which includes a new plan that lets customers spread out payments for three years if they are buying License and Software Assurance.

    Microsoft is offering customers the option of buying Software Assurance today and spreading out their payments through third-party, no-interest financing.

    While the option might be good for companies that are first-time software buyers, for those who already have a Windows license and have been steadily upgrading, the program offers little value, said one customer.

    John Logan, an IT manager at AngioDynamics Inc., Queensbury, N.Y., where he supports fewer than 200 end users, said that financing is not the issue. Rather, it's the fact that customers have to pay for whole new licenses instead of purchasing an upgrade.

    "They basically devalued our licenses," Logan said. "They said the licenses we had were invalid, and if we wanted licenses we had to buy new ones."

    The program, which is already offered in Europe, was designed to address some of the negative customer response to the company's move to an annuity licensing program. Small and medium-sized businesses took the biggest financial hit from the plan, although many large enterprises also refused to sign up.

    One analyst said that the jury is still out on whether customers actually bought into the program or whether they signed on because they needed to upgrade anyway.

    "Two years from now, when those agreements start to expire, the question is will they sign up for Software Assurance or will they drop out?" said Gartner Inc. analyst Alvin Park.

    At that point, Microsoft may have to put more value into its Software Assurance program, he said.

    As for the program for small and medium-sized businesses, Park said he thinks companies will like the fact that they can spread out the cost of the software over three years.


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