How to just say no to Software Assurance

If you have decided that Software Assurance is not a fair go, given that you are being asked to pay in advance for something that cannot be explained to your satisfaction, then the question is, "What is the penalty to pay if you don't buy Upgrade Advantage or Software Assurance?"

The last Techlaw column (
Making sense of Software Assurance) attempted to cover what is negotiable with Microsoft's Software Assurance licensing scheme, what negotiation should be attempted and how to document commitments that are made.

As some of you may have discovered already if you took the advice in the column, the arcane world of licensing is unfortunately not the stuff computer resellers are usually gifted in.

If you have decided that Software Assurance is not a fair go, given that you are being asked to pay in advance for something that cannot be explained to your satisfaction, then the question is, “What is the penalty to pay if you don’t buy Upgrade Advantage or Software Assurance?”

Microsoft has said repeatedly that the penalty (or price – depending on your point of view) to be paid for not taking up the temporary Upgrade Advantage and then Software Assurance is that you must, when you want to upgrade, re-buy your existing licences. Microsoft also says that the break-even point is around 3.5-plus years between upgrades.

That representation depends on a lot of things. In particular, break-even depends on Microsoft holding its prices constant for 3.5-plus years. You may have wondered “How can users who don’t want to buy Software Assurance rely on the Microsoft representation on the break-even trade-off at 3.5-plus years?” -- as no one, especially Microsoft, is prepared to guarantee that price will be held for 3.5-plus years.

Open source aficionados would probably point to Microsoft’s history of changing the ground rules, its prosecution in France for copyright violation and its conviction in the US Federal Court, and urge you not to trust the company.

Microsoft, on the other hand, appears to be taking a strategy of ignoring such questions, perhaps hoping that by its silence its critics will be thought to be lone voices and not worthy of Microsoft’s time to debate the points.

You might think that as this fight does not help you run your enterprise you should just ignore it. You might even wonder why such a simple issue as keeping an upgrade model that previously worked, along with Software Assurance, is such a big deal to Microsoft, particularly when all you want to do is remain a loyal Microsoft customer.

This article cannot answer those concerns because Microsoft will not explain why, if Software Assurance is such a great deal, the old upgrade model cannot remain in place alongside Software Assurance and give you the choice.

You may ask, if this is all too complicated, too expensive, too mysterious, too much hassle, “What are my risks if I do not want to get involved and do not want take up this Microsoft offer tp pay now to get current?”

Techlaw’s answers:

First, you can do nothing. If you can’t afford it, don’t understand it, don’t feel like a customer, doing nothing is, despite what Microsoft urges, a viable business option.

If you elect the do-nothing option you are joining many all around the world (including governments, but apparently not ours) that have announced that they will not sign up to this programme as currently formulated. If, however, you do nothing, you need to understand that that decision may involve a set of new business risks with Microsoft licence management and that you need to manage those risks to avoid problems. How to reduce exposure to Microsoft's licensing will be covered in our next article.

The second answer is to exercise your rights as a citizen of New Zealand. Simply, if you feel that you are not getting a fair go, complain. Write to IT and Commerce Minister Paul Swain, write to the Commerce Commission, write to the PM or Leader of the Opposition. If you have no faith in government or politicians, write to Microsoft, or to Fair Go or TelstraClear Business or Computerworld. If you do not like what is happening now, now is the time, before the programme goes into effect, to exercise your rights as a New Zealand citizen, to speak up.

Consider urging public debate or call on government not to buy this programme at special rates if those rates are not publicly available to you. Urge government to act to decree (it can if it wants to) that this programme be delayed for, say, two years so we can see how Microsoft performs in honouring its promises in the rest of the world.

Most of all, urge our government not to be naïve. You might want to consider, as we watch the US protect its steel mills, its sheep farmers and its dairy producers at the cost to us of profitability with our exporters, why our government appears to be ready to do nothing.

This programme will cost New Zealand industry, with no gain being demonstrated by Microsoft. Our apathy may be very obvious if, as has been reported, the Australian government is ready to reject Software Assurance.

If you need any final encouragement, consider why the hugely profitable Microsoft, with such power as a supplier, should be able to unilaterally determine that New Zealanders must pay more and continuously? Also, why can we not say that in New Zealand we do not allow vendors to take money for services where the contract then says that there is no obligation to deliver anything or provide any specific service levels? If Software Assurance was a consumer product it would be unlawful under the Consumer Guarantees Act.

The third answer is to join others in a class action. We could seek an injunction if it appears our Commerce Commission is not going to act to protect our rights from unilateral price increases and changes in conditions from a foreign company that has dominant market share in this market.

The fourth answer is to set up a programme to switch from Microsoft. Whether it is to switch to Apple, to Linux, to Sun or whoever, the costs will be huge. Keep track of every hour, every dollar spent on consultants, every new piece of hardware, every new training course. Microsoft’s conduct may be found to be illegal. The smart companies that have kept track of every cent on being forced to switch will be the companies that have a claim.

Ridiculous? The biggest problem with such global players is that even large companies (let's say in New Zealand those turning over more than $100 million) feel powerless in the face of a company that has tens of billions of dollars in the bank.

Is that feeling of powerlessness an excuse for giving up on keeping track of what Microsoft is costing you? The mighty cigarette companies have learnt that addiction is a two-edge sword. Perhaps Microsoft’s unilateral price hikes will end up with a same day of reckoning.

Horrocks is a partner in Clendon Feeney’s technology law team. This article, together with further background comments and links to other websites, can be downloaded from Questions and comments are welcome to Horrocks.

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