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As promised, Microsoft has made deep discounting a critical piece of its
full-court press to spark an upgrade cycle for Windows 7 and the forthcoming
Office 2010. And partners, for the most part, couldn’t be happier.

Microsoft’s latest move, expanding the half-off new licenses deal in its
Up-to-Date (UTD) Discount program to an even broader set of end customers, is
welcome news to partners who see services dollar signs shining in their eyes.

“We are a services-focused company, so if a customer can buy licenses
cheaper from anywhere, it doesn’t matter to us as long as we can do the labor,”
said Joe Foos, director of sales and marketing at LanLogic, a Livermore,
Calif., solution provider and Microsoft small business specialist.

Too often, business partners flinch when they hear about end-user discounts
on licenses, fearing a bite out of profit margins or worse: customers simply
going direct. But the way the new program from Microsoft is structured, neither
situation is the case and, at any rate, the services upside trumps any
potential cut in license revenue.

This week on its SMB Community Blog for its channel partners, Microsoft unveiled
of the expanded discount offer. Boiled down, the program now
extends its offer of 50 percent off the first year’s Open Value Licensing
payment for a Microsoft Windows 7 Professional Upgrade or Microsoft Office
Professional to current holders of Windows XP Professional and Office XP.
Previously, this offer was only extended to holders of licenses one version
older than the new software.

What’s important to note is that this offer is only available if the customer
either already buys licenses in the Open Value Licensing program or starts to
participate, according to Eric Ligman, global partner experience lead for
Microsoft’s Worldwide Partner Group. Open Value Licensing is more expensive
than some more basic licensing programs from Microsoft, but does include
Software Assurance benefits. From a partner perspective, Open Value licenses
are not sold direct by Microsoft and must go either through a VAR,
distributor or retail.

Dave Sobel, CEO of Evolve Technologies in
Fairfax, Va.,
said any incentive to get his customers to upgrade is worth its weight in
services dollars. And he sees the logic on Microsoft’s side.

“This is a very realistic approach,” Sobel said. “It recognizes that Vista
didn’t have the penetration they had hoped. I’m focused on services revenues—so
for me, this is a good thing, offering more ways to help customers
upgrade. The discount is on Open [Value], so they need a VAR
of some kind to make it happen.”

Ligman said Microsoft’s message to partners is that customers have a finite
IT spending budget in many cases, so whatever money they can save on software
licenses they free up to spend elsewhere.

“This opens up budgets at the end of the day,” he said. “Our partners make
their money through integration and customization and other services. Now they
can upsell and there’s money there.”

Some partners would love to see Microsoft take it even further than a
half-off discount.

“I am thrilled with this because we are out to get the best possible deal
for our clients, and any money they save on software they will have available
for services,” said Kevin MacDonald. “I would be even happier if they gave away
the software.”