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Life insurance for your software

Mar 15, 20043 mins
Enterprise ApplicationsMicrosoft

* Software Assurance and you

For a couple of weeks I’ve been pointing to this issue of the newsletter as the one where we discuss open source software – what it is, why it’s important and how it could be useful to your Windows network. All of the press reports about Microsoft’s latest public relations bumbling, though, cause me to put off that discussion for at least another issue.

The press has been full, of late, with stories about ship date slippages for Microsoft products. The new operating systems (Longhorn) are now rumored to be three and four years away for the desktop and server versions, respectively. This leads to major howling by those who bought into Microsoft’s Software Assurance plan in the past few years. Let’s take a closer look.

If you buy life insurance, do you scream because you don’t die so that no one can collect as your beneficiary?

If you spend hundreds – even thousands – of dollars to insure your car each year, are you upset that no one runs in to you so you can collect?

Do you feel like this is wasted expense? Think of Software Assurance as an insurance policy for your computers and then it doesn’t seem as bad. You are buying insurance against the greater expense of paying full price for an upgrade to the next version of a software package. Except, of course, for one little detail.

The detail is that the company selling the insurance is also the company providing the software upgrade. It isn’t difficult for the company to plan the upgrade release to come a few days after your insurance expires. After all, we’ve long accused durable goods manufacturers (cars, appliances, etc.) of “planned obsolescence” and having the goods fail just after the warranty expires. Shouldn’t be hard for a software vendor to do that.

Let’s face it, the profit margin on a software assurance policy that you can’t cash in is much greater than on one you can. And even greater than on the software itself. That’s one of the reasons that the subscription model of software delivery has always appealed to vendors – they collect whether or not they deliver new software.

Some major software purchasers, Fortune 50 types with tens of thousands of licenses, are going to take a bath if there’s no new software delivered under their Software Assurance contracts. Watch for Microsoft to offer cheap (or free) one or two year extensions to mollify them (and you). If it’s free, go for it. If it’s not, though, consider using the money for a better purpose – like investigating open source operating systems and software. More about that next time.