Re-up or Remove

Microsoft's problem these days is that upgrades are down. Many customers have found a version of Windows or Office that's good enough. There's no compelling reason to upgrade, so they don't. Microsoft's solution: Compel them.

The bumper sticker reads, "Don't laugh it's paid for." The car it's attached to isn't the newest or nicest in the parking lot, but it's good enough for somebody. And you can be pretty sure that it costs less to keep that clunker running for six months than one car payment.

That's Microsoft Corp.'s problem these days. Upgrades are down. Many customers have found a version of Windows or Office that's good enough. It's not the prettiest or most current, but that clunker does the job. There's no compelling reason to upgrade, so they don't.

Microsoft's solution: Compel them.

Aw, that's too strong. What Microsoft is really doing is offering to buy out the "perpetual licence" clause in many existing volume contracts. Under current deals, once the agreement expires, the customer can keep using the software forever. Microsoft wants to change that clause so that when the contract expires, customers must either re-up or remove the software.

Don Young, an analyst at UBS Warburg, says he has already turned up several Microsoft contracts with large European customers that have the "re-up or remove" clauses written into them. Under the new terms, customers must upgrade to the latest versions to renew their agreements.

So what? Well, at companies that upgrade pretty much in lock step with Microsoft, it's no big deal. They're already running the latest and greatest. Or they're six months behind the latest and greatest, but still upgrading regularly.

But for companies that have found a good enough version of, say, Office and jumped off the upgrade treadmill you know who you are the new clause forces you right back on it.

The irony is, it's a mark of Microsoft's success that so many customers have stopped upgrading.

Time was, upgrading desktop software wasn't a choice; it was a matter of survival. The features weren't there; the bugs were. Every new version edged a little closer to good enough, but it was never quite right.

But Microsoft finally delivered the goods or good enough, anyway. Today, there's plenty of copies of outdated Windows and Office out there just chugging along. At long last, they're mature, stable and working fine.

And like that eyesore in the parking lot, this old software is a known quantity. Its bugs and quirks are familiar to both IT and users. You know how to work around problems and squeeze out the capabilities you need. Besides, it's paid for. Why upgrade?

That's a question only Microsoft can answer. Those new terms will effectively eliminate the choice not to upgrade. That means Microsoft's answer had better be pretty impressive.

So when Microsoft comes calling to buy out your perpetual licence clause, do the math. Calculate the real cost of all those extra upgrades you'll be forced to do including the labour, the learning curve, the applications that break and the hardware that turns out to be inadequate.

Figure in what the lost flexibility will mean at budget time you'll no longer have the flexibility to put off upgrades when times get tight. It's one more chunk of your budget that's out of your control.

Then listen to how much Microsoft offers to make those extra costs and loss of budget control worth your while. Hey, don't laugh maybe they'll pay for it.

But don't count on it.

Hayes, Computerworld US' senior news columnist, has covered IT for more than 20 years. Send email to Frank Hayes.

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