Users Balk at Software Assurance

By Peter Galli  |  Print this article Print


Desktop-as-a-Service Designed for Any Cloud ? Nutanix Frame

Late products and a deficit in value are leading Microsoft customers to nix their renewals—which could put a crimp in Microsoft's SA goal of allowing customers to spread out the payments for their volume software over several years.

Microsoft is facing pushback from volume licensees whose three-year Licensing 6.0 and Software Assurance plans are about to expire.

Many of the Redmond, Wash., company's volume license customers, whose contracts have expired or are set to expire, are questioning the value they got from the programs and whether they should renew.

At the same time, another Microsoft Corp. licensing program, Upgrade Advantage, will reach the end of its life this month when the last customer contracts expire. Those customers can continue to use the software they acquired under the program, but they will not get further product upgrades and will now have to pay for full versions of Microsoft products or sign up for Software Assurance.

A falloff in renewals could put a crimp in Microsoft's SA goal of allowing customers to spread out the payments for their volume software over several years—and giving Microsoft a stable annual revenue stream.

Steve Dunton, chief technical officer at ActivAeon XA, a division of Techtonik Ltd., in Sunderland, England, and a Microsoft partner, said many of his customers are disappointed with their Software Assurance experience because of the many delays in the release dates for several Microsoft products.

Click here for a column comparing Microsoft Software Assurance with Red Hat Network.

Dunton said he expects that many enterprises will not renew their agreements and pay full price for future upgrades instead. Those enterprises that do renew plan to negotiate much harder on price, he said.

Some Microsoft users were expecting new desktop and database product upgrades during their first Software Assurance contract. But the company has pushed back several products, including the next version of the Windows client (code-named Longhorn, now due in 2006) and server (expected in 2007) and the upgrade to SQL Server (code-named Yukon and slated for release next year).

Enterprise customers such as Chuck Kramer, chief technology officer for Social & Scientific Systems Inc., in Silver Spring, Md., are concerned about the product delays. "Much of our decision to go with Licensing 6.0 and Software Assurance was based on pure economics and Microsoft's anticipated timeline," Kramer said.

"That has borne out to be an incorrect calculation on our part. We are not very pleased with the Software Assurance program. We don't feel it has been a good value for us overall."

Another customer, David Robert, a systems manager for a global consulting and engineering company in Cambridge, Mass., questioned the value his company has received under Licensing 6.0. "You still have to pay Microsoft one way or the other. I'm not sure the value of the new licensing model has been realized," he said.

Others, such as Jack Beckman, an application programming manager in Southfield, Mich., see no reason to sign up for another such agreement, given the lack of value he feels his organization has received. "Since it appears we'll get no upgrades from our current agreement, I don't see much point in entering into another one," Beckman said.

In Microsoft's defense, Cori Hartje, the company's director of marketing and readiness in the worldwide licensing and partnering program, said she is upbeat about renewals for SA, adding that, so far, 66 to 75 percent of those with enterprise agreements are renewing.

Hartje said no company guarantees upgrades and that Microsoft provides things such as security patches and updates for free. "We also certainly do not build products to fit into any particular upgrade cycle," she said.

But some buyers said SA is not appropriate for customer needs and should be changed. "Executives who stay awake at night fantasizing about thousands of customers who will upgrade multiple systems and applications in a three-year period are doing just that—fantasizing," said John Persinger, an internal-network administrator for Source4, in Roanoke, Va.

"We understand that Microsoft's solutions continue to benefit them more than us, and our goal is technology for the good of the business we run rather than technology for technology's sake."

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Peter Galli has been a financial/technology reporter for 12 years at leading publications in South Africa, the UK and the US. He has been Investment Editor of South Africa's Business Day Newspaper, the sister publication of the Financial Times of London.

He was also Group Financial Communications Manager for First National Bank, the second largest banking group in South Africa before moving on to become Executive News Editor of Business Report, the largest daily financial newspaper in South Africa, owned by the global Independent Newspapers group.

He was responsible for a national reporting team of 20 based in four bureaus. He also edited and contributed to its weekly technology page, and launched a financial and technology radio service supplying daily news bulletins to the national broadcaster, the South African Broadcasting Corporation, which were then distributed to some 50 radio stations across the country.

He was then transferred to San Francisco as Business Report's U.S. Correspondent to cover Silicon Valley, trade and finance between the US, Europe and emerging markets like South Africa. After serving that role for more than two years, he joined eWeek as a Senior Editor, covering software platforms in August 2000.

He has comprehensively covered Microsoft and its Windows and .Net platforms, as well as the many legal challenges it has faced. He has also focused on Sun Microsystems and its Solaris operating environment, Java and Unix offerings. He covers developments in the open source community, particularly around the Linux kernel and the effects it will have on the enterprise.

He has written extensively about new products for the Linux and Unix platforms, the development of open standards and critically looked at the potential Linux has to offer an alternative operating system and platform to Windows, .Net and Unix-based solutions like Solaris.

His interviews with senior industry executives include Microsoft CEO Steve Ballmer, Linus Torvalds, the original developer of the Linux operating system, Sun CEO Scot McNealy, and Bill Zeitler, a senior vice president at IBM.

For numerous examples of his writing you can search under his name at the eWEEK Website at www.eweek.com.


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