Microsoft tries to win back SMEs on licensing

Microsoft New Zealand is to introduce a new software licensing scheme for small and medium-sized businesses that provides discounts similar to those given to large customers and the ability to spread payments over three years.

Microsoft New Zealand is to introduce a new software licensing scheme for small and medium-sized businesses that provides discounts similar to those given to large customers and the ability to spread payments over three years.

The scheme is intended to ease the upfront cost and complexity of Microsoft licensing.

Microsoft small and medium-sized business manager Paul Muckleston says the local operation will follow head office’s plans to modify its software licensing polices for companies with five to 500 PCs. The Open Value scheme will be available in North America in the first quarter of 2003 and offered here in the first half of next year.

Muckleston says the scheme will give SMEs dis-count deals similar to those given to large customers under Enterprise and Select licensing schemes. Being able to pay over three years will remove the need for qualifying users from having to pay the upfront fee Microsoft charges as part of the Licence 6.0 licensing plan it introduced in July.

For a small business with 20 PCs the most expensive option today would be to buy 20 shrinkwrapped copies from a retailer. Less expensive would be to buy 20 PCs with the software preloaded. Least expensive would be to buy an Open Licence. However, the changes offer another, cheaper option, whereby companies committing to run Microsoft product on every PC get even greater discounts.

Microsoft is still working out the details of what best fits the New Zealand market. The changes will also entail a lot of training for computer resellers, says Muckleston. He says the majority of Microsoft’s business customers will be eligible for the new scheme. Small and medium-sized business accounts for 60% of the companies revenue.

Overseas reports say that many smaller companies, or those which don’t upgrade regularly, have resisted Licensing 6 and its Software Assurance scheme, which requires customers to pay for software two years in advance and includes a 29% annual maintenance fee. But Muckleston says the majority of SME customers in New Zealand have been signing up for Licensing 6 and Software Assurance.

“New Zealand has always had one of the highest proportions of people to sign up for maintenance, or as we call it annuity licensing. It is the most penetrated market in the world compared to places like Malaysia, where only about 10% of customers take maintenance agreements.”

He says the decision to modify the SME licensing is not a response to the growth of Linux.

“I think the growth of Linux has been a response to how hard Microsoft has been to deal with. People have been saying licensing is too hard – make it simpler and give us a discount to recognise how much we’ve bought from you.

“Linux has got attention because it’s not Microsoft and people want a choice. We pissed people off with L&SA 6 [Licensing and Software Assurance 6]. If we make it better to deal with Microsoft then I believe that will affect the popularity of Linux. We have to make our products more secure. We know we need to do it and that sort of thing takes time.”

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