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Microsoft’s new licensing model, called Software Assurance, allows customers with more 250 PCs to pay a yearly subscription for products such as Windows, Office, SQL Server, .Net servers and other enterprise products.

Software Assurance (SA) supplements the current range of upgrade licences available to enterprise customers. Corporates were given several options:

• Upgrade their software to the latest version and enrol in SA by October 1, 2001 (since moved forward twice to July 31)

• Buy Upgrade Advantage, which expires in 2003 and automatically enters users into SA

• Sign up for an Enterprise Agreement, which entitles users to discounted software — up to 50% off — if they agree to use Redmond’s products instead of a rival’s

• Do nothing and buy new licences as and when needed. Those who declined SA would have to pay the full price for new software licences the next time they wanted to upgrade

Microsoft says under the scheme only 20% of customers would see a cost increase and 30% would actually see a decrease. But according to a Gartner Group report, US IT executives forecast software costs rising on average 107% per year. Another calculation by US IT execs meant SA's subscription would cost customers using PC software their one-time licence and an extra 29 cents in the dollar each year.

Microsoft made some changes in response to user concerns, but IT managers appear unmoved.

While SA is a global licensing change, at the personal user level Microsoft is also trying out “end-user subscription licensing” for Office XP in New Zealand, Australia and Brazil.

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