Microsoft looks to address licensing flap

Microsoft has begun tweaking its licensing programs to address the confusion and financial burdens it has admitted creating with its new Licensing 6.0 plan.

The company last week introduced client access license (CAL) programs for Windows .Net Server 2003 at the same time it shipped the latest and likely final beta-test version for the operating system. The options allow licensing per user or device, replacing the single per-seat requirement; expand the scope of the Internet Connector license; and add a required fee for access to Terminal Server features on the server. The CALs are required to access server software, which can be purchased under the Licensing 6.0 volume licensing program.

Microsoft also said recently it would introduce early next year its Open Value payment plan for small to midsize businesses, which spreads Licensing 6.0 payments over three years and offers no-interest financing.

Licensing 6.0 and its Software Assurance maintenance program has created a cauldron of discontent among Microsoft customers since it was announced last year because it raises costs for some users by up to 100% and locks them into buying upgrade rights for software they might not want.

In October, CEO Steve Ballmer acknowledged that the program was confusing and that some companies still could not understand the end-user license agreement. He also said the program created economic hardships for some and vowed changes.

Observers say many are needed.

“This is all a Band-Aid on a compound fracture,” says Laura DiDio, an analyst with The Yankee Group. “We have yet to see the major fallout of this licensing issue.”

Microsoft says many customers have requested flexibility in CAL pricing because of the variety of devices users now deploy.

But none of the new CAL options will be retroactive to Windows 2000, although users can purchase a .Net Server 2003 license, downgrade the rights, run a Win 2000 server and exercise the CAL options.

The Open Value program is targeted at customers who are most likely to balk at price increases and defect to Linux, DiDio says.

“For these companies it is not a big chore from an infrastructure perspective to rip out Windows and replace it with something else,” she says

The CAL announcement was made in conjunction with the second beta of Windows .Net Server 2003 because that software introduces a setup screen that has the new CAL options and asks users which one they want.

“The objective here is use rights,” says Bob O’Brien, group product manager for Windows servers. “We want to make sure we are consistent, predictable and standardized across the enterprise.” he says similar options likely would follow for other Windows servers.

With .Net Server 2003, Microsoft also is renaming its Internet Connector CAL to External Connector and expanding it to cover connections to the server made by business partners. And the company has changed its Terminal Server CAL license to require every user that connects with a thin-client to have a CAL. Previously, if corporations were running the same version of a client and server, such as Win 2000 Professional and Server, the Terminal Server CAL license was free.