Microsoft freebies intended to sweeten controversial licensing program

Microsoft on Tuesday sweetened the pot on a volume-licensing program that has left a sour taste in the mouths of users since its official rollout last year.

The company will offer free training, support, and software tools for customers that buy into Software Assurance, the company’s maintenance option to Licensing 6.0, its volume-licensing program. The perks will begin on Sept. 1 for all current and new Software Assurance subscribers.

Experts say the freebies could add up to as much as $10,000 in savings on services and software.

“Clearly Microsoft is coming around and trying to get a second chance to make a first impression,” says Laura DiDio, an analyst with the Yankee Group. “What they are offering is a bag full of goodies that represent intrinsic value.” DiDio says it is public acknowledgement that the company has made some serious errors and that the additions to Software Assurance represent both an apology and a solution.

Since its announcement in May 2001 and until its rollout last fall, Licensing 6.0 has put Microsoft at odds with many customers who said the program would dramatically increase their software costs. The company is trying to repair those relationships as well as spark interest in a licensing program that has seen revenue declines for the past two quarters.

Microsoft’s efforts to repair customer relationships began late last fall when it offered financing deals to smaller customers. The company then introduced per-user or per-device client-access license options for Windows Server 2003 and changes in per-processor pricing.

Microsoft’s pricing for its software maintenance, however, still remains tops in the industry, according to the Yankee Group. The price for Software Assurance is factored at 25% of server licensing costs and 29% for desktops. Computer Associates is second at 22%, while other big vendors such as IBM, Oracle and SAP come in between 18% and 22%.

Microsoft said it would not adjust the pricing on Software Assurance but instead would offer add-ons including free Web-based and/or telephone support on servers as well as vouchers for free technical training courses that can cost as much as $1,500 a day.

The new programs give users with Standard Edition servers under Select and Enterprise Agreement licenses unlimited Web-based support. The same customers with Enterprise Edition servers will get unlimited Web and telephone support. Customers with Open Value licenses with a minimum of five Standard Edition servers will get two Web-based support calls, while Enterprise Edition server customers will get two telephone-support calls.

Microsoft also is offering vouchers for free certified technical training for IT staff and free self-paced online courses for end users.

“The vouchers will vary by contract, but an Enterprise Agreement customer could get 200 classroom days over the life of a contract,” says Rebecca LaBrunerie, product manager for worldwide pricing and licensing. The courses, which are offered at Microsoft Certified Technical Education Centers, are used to certify IT staff on Microsoft products. Those courses can cost anywhere from $500 to $1,500 per day, according to LaBrunerie.

“Clearly Software Assurance is now so much more than upgrade protection,” she says. “It’s about customer success through training, support, tools and employee productivity.”

All Software Assurance customers with desktop and server licenses also will get a free subscription to TechNet, Microsoft’s online site for IT professionals that includes such services as chat with Microsoft advisors, how-to articles and service pack downloads. The subscription is regularly $1,000 for Licensing 6.0 customers, according to Microsoft.

The company also is offering free deployment and error-checking tools to Software Assurance subscribers. The first will be the forthcoming version 2.0 of its Corporate Error Reporting software. The software is similar to the error-checking in products such as Office, which allow a user to send Microsoft any dialogue box they see on-screen that describes an error. With the corporate version, enterprises can set up their own internal error reporting system. In addition, Microsoft also will offer free its Windows Preinstallation Environment, a management tool developed for OEMs that allows mass deployment across a company of a single desktop. The tool is a light version of the Automated Deployment Services tool that Microsoft is developing for resale as part of its sweeping management platform initiative.

Also as part of the new offering, Microsoft will allow companies to give employees home use rights on products they license through Software Assurance. For example, an employee could get a copy of Office for just the shipping and handling charges of about $25. Microsoft also will offer discounts up to 30% on other software products such as Windows XP or Microsoft Money. The sales would be directly to employees through an online storefront operated by Microsoft.

Despite all the changes, Microsoft said it had no plans to cut the volume-licensing price on its software.