Ballmer: We're doing deals over Software Assurance

As the July 31 deadline for the introduction of Microsoft's Software Assurance licensing scheme looms, chief executive Steve Ballmer talks about the changes.

As the July 31 deadline for the introduction of Microsoft’s Software Assurance licensing scheme looms, chief executive Steve Ballmer has as good as confirmed that the company is doing deals with customers who are up in arms at the change. Ballmer talked about Software Assurance during an interview with Computerworld US, which started with a question on the reasoning behind the scheme.

The impetus was primarily to simplify licensing, because our customers were real confused about what to buy. That was actually impetus number one, and under the new licensing programme, we actually have eliminated a lot of options.

Options are good sometimes, but if customers can't understand them and don't know when they're legal and when they're not legal and what they're buying, they don't like that very much. So we have a much simpler programme under the new plan.

Under the new system, we keep track of everything. Once you put something under assurance, we know it stays under assurance. And if it's not under assurance, there's only one thing you need to buy: You've got to buy the licence again.

We had plenty of people under the old system who didn't keep track of licences, weren't sure whether they were eligible for upgrades, [who] overbought. We probably had plenty of people who underbought, too. But it was kind of chaotic, and nobody ever was sure whether they were getting the right thing, whether they were legal or not. . . .

Under Software Assurance you charge 25% of the volume licence fee for server software and 29% for desktop software on an annual basis. Are those percentages set in stone?

The prices are appropriate, is what I would say. I can make the percentage go down. We'd just increase the prices of all the products.

Many users point to lower percentages of other vendors when they complain.

And the argument I make is quite simple: We do not want to charge the same kind of outrageous prices that many people do for enterprise software.

Such as?

I will not.

Oh, you will …

(Softly) Oracle … If people want us to take more of it on the front end and take less on the back end, okay, we'll do it. If you want to buy a product from us and then not buy assurance, you can do that, too …

Low maintenance percentages are the purview of the company that has very high acquisition prices. And so I guess you could say in that way we're trying to break through a little bit.

Many customers were hurt by the elimination of the version upgrade programme (VUP), which allowed them to upgrade from one version of a software product to another in the same product family at discounted rates. What would you say to them?

The greatest challenge is around the fact that we eliminated the VUP. But either you eliminate the VUP or nothing about the whole assurance scheme makes any sense. Then the customer's again in a position where they're either counting licences, they're counting them well, they're not counting them correctly.

I've got plenty of customers who tell me, “This is going to cost me more money.” And then, when I actually look at their purchase history, I can prove to 'em it's going to cost 'em less. And I have customers who say that “It's going to cost me more money,” and I look at their purchase history, and you know what? It is going to cost them somewhat more. But at least it's a rational and predictable framework.

Any chance you'll bring back the VUP?

You can't do that. There may be other things we can do. We can't just turn back the clock … and go to those customers who have gotten on the new programme and say, 'Whoops. All the old options are back in place.' And then they're going to say, “Okay, well, I want to wind back, and I want to see whether I still like the option I took.”

But if there are issues -- you know, we reserve the right to be smarter every day we come to work, and certainly we're going to work with our customers to address their issues. There's no doubt about that.

Is there any chance anything will be done to include support with maintenance?

We're smarter every day.

And you'll make a deal?

We've been making deals with people. Sure. We're trying to earn customers' trust. If there are customers that have issues, of course, we're going to try to earn that customer's trust by creating a win-win situation. And we've done that many, many, many dozens of times with customers as they have evaluated our new licence.

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