Microsoft Software-Licensing Plan Draws Fire

Baldwin Louie — Tue, 25 Sep 2001 15:00:00 -0700

Some companies are grumbling about a new Microsoft Corp. software-licensing plan that goes into effect next week, saying it will raise costs and stretch already strained technology budgets, Tuesday's Wall Street Journal reported.

But Microsoft (MSFT), Redmond, Wash., says that most customers will see their software-licensing costs stay the same or even drop under the new plan, which was announced in May and goes into effect Monday.

The plan essentially encourages companies to subscribe to a new software- maintenance program that delivers automatic upgrades of critical products such as Windows and Office. But the plan eliminates discounts for companies that now buy upgrades in bulk for individual products.

So, for many companies accustomed simply to buying new versions of Microsoft products when they need them -- often only every four or five years -- the program will cost more, Microsoft acknowledges. Companies have until Feb. 28 to sign up for the new maintenance plan, called "Software Assurance," and those who don't will have to buy more expensive licenses when they are ready to upgrade. Companies' ability to buy individual upgrades expires next week.

Some market-research firms have estimated the effective price increases for some companies at 30% to more than 100%. "This is perhaps the single largest price increase Microsoft has ever done," says Chris Le Tocq, an analyst with Guernsey Research in Los Altos, Calif.

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Microsoft Software-Licensing Plan Draws Fire