Money rolls in from Software Assurance

With Microsoft's Software Assurance licensing scheme deadline kicking in this week, nationwide reseller Computerland says it's been a bonanza as customers upgrade.

With Microsoft’s Software Assurance licensing scheme deadline kicking in this week, nationwide reseller Computerland says it’s been a bonanza as customers upgrade.

And the company’s Microsoft product and licensing manager, Leanne Nydam, says it’s time for those still resisting the scheme to “get over it”.

“It has driven revenue,” says Nydam, though she won’t say to what extent.

Microsoft New Zealand head Ross Peat says it, too, has seen sales climb as the deadline approaches. The company released financial results 10 days ago which record a 13% revenue rise in the year to the end of June. Microsoft doesn’t disclose its local sales, except to say they exceed $100 million. Worldwide, the company reported revenue of $US28.37 billion, a 12% increase on 2001, with fourth-quarter desktop software revenue going from $US4.55 billion to $4.97 billion. Analysts attribute that to the introduction of the new licensing scheme.

Software Assurance, whose deadline has twice been extended in response to negative market reaction, replaces the range of upgrade licences available to enterprise customers, including Version Upgrade, Product Upgrade, Competitive Upgrade and Upgrade Advantage. Upgrade Advantage remains an option until Wednesday, but after that time Software Assurance will require Microsoft customers to pay a licence cost plus a maintenance fee of 29% for application and desktop software and 25% for server software, two years in advance. Those who fail to enrol will have to pay the price of a new licence when they next upgrade.

Criticism of the scheme has centred on the maintenance fee levels and absence of any guarantee that Microsoft will release new versions of its software within the period covered by the licence.

Nydam says it’s “laughable” that customers would think upgrades might dry up, although she concedes that licensees might have concerns from a strictly legal perspective.

“I can easily dispel that by showing them Microsoft’s roadmap from the past 10 years,” she says. “The day Microsoft stops releasing upgrades is the day Bill [Gates] doesn’t want to make money anymore.”

Computerland has been beating the drum for Software Assurance for a year and Nydam says in that time she’s been able to change the minds of customers who resisted the new scheme on the grounds that it was merely a Microsoft revenue grab.

“What we did was sit down with customers — both the financial and IT sides — and tell them the benefits.”

Those are ease of licence management and access to latest products — in particular the .Net platform — necessary “for businesses to interact around the globe”.

According to Nydam, 95% of the company’s Select Agreement customers — with from 100 to 9000 PCs — have signed up, about 80% of customers with about 100 PCs, and about half of those with fewer than 50 PCs.

A Computerworld email poll earlier this month returned much lower rates of sign-up. Of the 121 respondents, 88% said they hadn’t enrolled in the scheme and 79% of those said they didn’t plan to. About two-thirds of respondents had fewer than 50 Windows licences and 17% had more than 250.

Microsoft’s Peat won’t reveal the rate of uptake, but says it’s higher than reflected in the Computerworld poll and ahead of the company’s expectations.

He says a lot of “emotion and anger” has been stirred up by the introduction of the scheme, which he concedes could have been handled better.

“There’s been some very real disaffection out there; there’s been some anger expressed at times. There are some who say it’s not the best value for their organisation and are moving to other platforms.”

But he says that’s not visible in the company’s bottom line results at this stage.

Auckland lawyer and Computerworld contributor Craig Horrocks, of Clendon Feeney, has been at the centre of resistance to the scheme. He took an unsuccessful complaint to the Commerce Commission claiming its introduction was anti-competitive on the grounds that licensees were being asked to pay for upgrades for which there was no guarantee of delivery.

Horrocks says with two days to go before it comes into effect “not making a decision [about enrolling] doesn’t get rid of the problem; if you ignore it, you’re making a decision to rebuy all your software”.

He continues to criticise Microsoft New Zealand for not providing a mechanism on its website for customers to work out the cost implications of the scheme. Peat says the company considered that but decided to leave it to partners to provide that information.