Microsoft Gears Up Software Assurance Changes

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Subscribers to Microsoft’s Software Assurance program can look forward to
some new licensing options for the Office System on Monday, Sept. 1, as the
software titan tweaks the
program again in response to customers’ concerns.

The latest tweaks will allow customers who buy Microsoft products through
OEMs to sign up for the Software Assurance program. Originally, when
Licensing 6.0 launched, application product licenses acquired through the
OEM channel were not eligible for upgrade protection through Software
Assurance. The tweaks also add a limited-time program that will allow
customers to alter their licensing schemes in the wake of Microsoft’s newly
aired decision to differentiate applications in the 2003 editions of
Office.

“With the 2003 release of the Microsoft Office System, Microsoft chose to
introduce a new product differentiation and enhancements in the
capabilities of the Professional versions of both Project and Office
Professional Suite and its individual programs,” a Microsoft spokesman told
internetnews.com. “Microsoft understood that some Software Assurance
customers who had purchased the Standard Editions in the past may have made
a different purchase choice had they known at the time of purchase about
Microsoft’s plans to offer differentiated applications in the 2003
editions.”

Office Standard edition customers who want to take advantage of the changes
have two options:

They may choose to deploy and run, in place of Office Standard 2003,
the Professional versions of Excel, Word PowerPoint and Outlook and may
gain perpetual rights to those programs for free; however, customers who
choose this option do not have rights to deploy and run the other component
applications in Office Professional 2003 (Access, InfoPath, Publisher and
Business Contact Manager), nor will they be eligible for upgrades or to
renew Software Assurance on Office Professional upon expiration of their
upgrade protection coverage for Office Standard
They may choose a promotional path to the full Professional Edition
through Microsoft’s new Step-Up License, which will give Office Standard
Edition customers use rights to the Professional Edition and any updates
provided through Software Assurance; the promotion is only effective from
Sept. 1, 2003 to Sept. 1, 2004.

“Red the fine print very carefully to make sure that when you get that
license you’re able to keep going in the direction you want,” Joe Wilcox,
lead Microsoft analyst at Jupiter Research, told internetnews.com.
“If you take advantage of the Office Professional offer, when it’s time to
upgrade again you either have to pay for the Professional version or go
back to Standard.”

That may be easier said than done if organizations start making use of the
new XML and rights management features that are integral to the
Professional Edition. And taking full advantage of the Professional Edition
may cost more than the sticker price of Office itself, Wilcox said.

“In some cases, to maximize the benefit, [businesses] might also want to
buy additional server software and therefore client access licenses,” he
said.

He added, “Companies need to closely watch what it’s going to cost them to
adopt all of those technologies. The need to weight that against the value
that they get from those technologies. Just because it costs more up front,
that’s not necessarily a bad thing. What it really comes down to is what is
the value you get out of the software?”

The updated Software Assurance program will also offer other extras, such
as “home use rights” that allow employees to install a version of Office
2003 on their home PCs in addition to their PCs at work.

“There, it’s a question of whether companies feel that that’s something
really exciting for them,” Wilcox said. “Conceptually, it seems like it
would be important, but it’s a question as to whether companies see that as
a bonus as well.”

Whether companies look eagerly upon home-use rights or not, though, Wilcox
said that he expects to see more such extras for Software Assurance
customers.

“Going forward, look for Microsoft to offer more rewards to companies that
signed up for Software Assurance,” he said. “My prediction: Microsoft will
offer some big discounts or incentives to Software Assurance subscribers
with each new product roll out. The Office 2003 home-use rights is a good
example. But there is a catch: Businesses would need to move to the next
product version to get those extras. While the base Software Assurance
contract may cover the basic upgrade, additional CALs and other unseens may
lead to additional spending.”

Software Assurance is an annuity-based licensing offering, under which
subscribers pay Microsoft 29 percent of the total cost of the software per
year over the life of the contract, though Wilcox noted the fee schedule
can be a bit more complicated when factoring in the license plan itself
(Open Value, Open or Select), or when accounting for CALs.