Redmond Negotiator

Microsoft's 'New' SA Results in Same-Old Story

Despite the press coverage you might be reading about Software Assurance's new benefits, don't change your approach just yet.

• By Scott Braden
• 03/21/2006

Whenever Microsoft makes any announcement about licensing and software assurance, I always like to read the resulting reporting and commentary from various sources. For my personal entertainment, I keep a count of how many sources:

• Blindly copy and paste the Microsoft press release (Why not just point readers to the original source, here?).
• Get key facts just plain wrong.
• Entirely miss the main point of the news.
• Make vague and meaningless predictions.

As with previous announcements, this latest one has received the same treatment. Below, I'll take a look at how it happened again, and show how the most recent changes really aren't as newsworthy as you might think.

Seven Doesn't Always Mean Seven
Yes, Microsoft announced seven new Software Assurance benefits (note that the press release says eight, but Extended Lifecycle Hotfix Support was actually introduced in July 2005). However, the changes won't apply to everyone and every product.

For example, "Information Work Solution Services" is only for Open Value licensing customers, while the addition to "Extended Training" only applies to customers with at least 30,000 Windows or Office licenses.

Here's a quick list of the new benefits:

• Desktop Deployment Planning Services  
• Information Work Solution Services
• Windows Vista Enterprise -- being touted as a new benefit, even though Microsoft watchers have known it would only be available to SA customers for quite a while now.
• Extended Training -- modified for big customers.  
• 24x7 Problem Resolution Support
• Windows Fundamentals for Legacy PCs
• Enterprise Edition Step-Up License  

Missing the Point
From reading the articles by press and analysts, one would get the impression that Microsoft has made major changes (it hasn't), or that these latest announcements will change many customers' decision making about SA (they won't).

Here's the real point: These are incremental, minor tweaks that are designed to get a few more customers to buy SA. For larger customers, the most important change is that Windows Vista Enterprise will only be available to SA customers.

Which all makes sense, if you're a Microsoft shareholder (I'm not, by the way). After all, Microsoft's challenge has been that SA is still perceived by most customers as primarily a "version upgrade" program.

Many customers have done the analysis and decided it's a better choice to not buy SA for desktop Windows, but instead to just take the OEM Windows that comes with their new PCS and let the hardware refresh cycle take care of their OS upgrades.

Most of my clients are concerned about Vista Enterprise. If you need Full Volume Encryption, Virtual PC Express or a single image that includes all languages, then you should take another look at SA.

Frankly, I still see most of the other SA benefits as “nice to have,” but most customers that have bought SA fail to ever take advantage of the benefits. If you're not ever going to use it, why pay for it?

Predictions: Vague and Meaningless vs. Specific and Useful
One theme that I see in this latest round of news reporting is that these latest announcements change SA enough that companies will have to re-evaluate SA entirely.

Well... shouldn't you re-evaluate every product or service you buy, every time you make a buying decision? If you're in a buying cycle with Microsoft at the moment, then sure, you should carefully evaluate SA (and you probably already are). If you're in the middle of a contract cycle, then no, I don't see reason here for a top-to-bottom re-evaluation.

Here's another quote that cracked me up:

"We think there is a significant possibility that one or more of the main commercial software vendors will abandon initial software purchase fees in the next 12-18 months, moving to a ‘support-only' revenue model."

Well, gee. There's a bold prediction.

OK, in all seriousness, you need specific and useful predictions and advice. So here's mine: Microsoft will continue their historical pattern of making incremental changes to licensing terms and policies that result in customers paying more for the same products.

So, in short, you can tell your bosses that, "If we continue to use the same Microsoft products, we should expect to pay more ‘per head' every time our contract comes up."

It's that simple: Microsoft has an obligation to shareholders to maximize profits. Most of their revenues and profits come from their Windows and Office installed base. So, one of the most effective ways to increase profits is to increase "revenue per desktop."

So what decisions should you make or change because of this announcement? My answer is the same as always: Do your homework, do the detailed product-by-product analysis. For specifics, take a look my column from last month, "Microsoft's Divide and Conquer Strategy."