Home > Microsoft > Microsoft’s Direct Approach Saves Businesses Money Microsoft’s Direct Approach Saves Businesses Money Eugenia Loli 2003-06-18 Microsoft 11 Comments Licensing doesn’t really lock customers into a constant frenzied upgrade cycle of products they don’t actually need. Read the article at Silicon.com. About The Author Eugenia Loli Ex-programmer, ex-editor in chief at OSNews.com, now a visual artist/filmmaker. Follow me on Twitter @EugeniaLoli 11 Comments 2003-06-18 4:17 pm Doesn’t this still cost more? The EA plan is the top-level plan. It’s best deal, but also the most expensive upfront. It’s the lower plans that cost quite a bit more… The ones that smaller businesses must use beacuse the EA is too costly. This seems like a fluff article that is used to promote the EA plan over MS’s other plans. Plus, it is still more expensive then previous MS solutions, that existed before new licensing schemes. 2003-06-18 4:18 pm We tried this route with MS two years ago and it cost us 45% more this year than they promised…. 2003-06-18 4:45 pm ..because they already got your money, so why release an upgrade till your SA runs out! Seriously, it’s not much different than what other companies do with software maintenance, but the fact that they change plans so often is the issue. There were contracts signed before the EA push that had multiple years left! But they changed the plans and asked for more money…kinda like the banks with their “fees” lately. There’s nothing in the contracts that really prevents that either. I’d like to hear from someone who it actually worked for. Are there any Win2k/office2K shops that paid in and got free upgrades to winXP/officeXP? I’ve noticed that since SA new versions are lacking–any GOOD experiences? 2003-06-18 4:57 pm “Licensing doesn’t really lock customers into a constant frenzied upgrade cycle of products they don’t actually need.” Because the next update won’t be out for 2 more years! (Despite initial promises of a 3 year cycle with a focus towards delivering new and better software sooner than that.) Our EA agreement cost us nearly 40% more. We chose to because inventory tracking became easier and we were increasingly groing paranoid that a branch office or some home user could screw us with a pirated copy of software. Now we are more paranoid as MS is 100% aware of our current software and hardware inventory. Not fun. Not cheap. 2003-06-18 5:10 pm This guy has it all backwards. Vendor lockin is the primary cause of expensive IT infrastructure. It has nothing to do with the license agreements and everything to do with the fact that the software vendor controls 95% of the market place. If this wasn’t true, Microsoft Windows would be continuously going down in price. Just like everything else in our industry that is subject to competition. The fact is, Microsoft doesn’t need licensing agreements, per se, when it can set the market price, boosting the cost of windows 10%-12% per year, regardless of market pressures. Secondly, if you are costing out 40% more in licensing fees, in just ONE YEAR, and you are not looking at alternatives, your company is going to have major problems in the next 5-6 years if you just stand there and say “Oh Well, I guess we have to pay…” At those price hikes and Java, you can build your own ERP system, CRM system or whatever with todays market dynamics. My firm which does exactly this, had to reduce the Dot com boom hourly rates from $100 or more an hour to $50-60 an hour to stay in the market. This makes it very cost effective for companies to consider building thier own apps. Which THEY OWN, which THEY DECIDE when an upgrade is warranted, and THEY DECIDE when they will stop supporting. -gc 2003-06-18 5:24 pm Right. This isn’t an article, it’s a full-page advertisement for Microsoft’s crappy subscription-based licensing. “We now estimate that 30 to 35 per cent of large customers have Microsoft Enterprise Agreements.” Suckers… Paul DeGroot, analyst at Directions on Microsoft, said: “They have been pushing it very, very hard. It is the most lucrative form of agreement for Microsoft and involves the tightest relationship.” It’s a tight relationship alright. Kind of like the tight relationship a Boa Constrictor has with its victims… For customers with 250 to 2,399 desktops, An EA license will cost $289 per year per employee, said Park. The fee includes any Windows XP Professional upgrades that come out during the term, a copy of Office XP Professional, all upgrades to Office XP Professional, four client-access licenses (CALs) for accessing Exchange and three other commonly purchased Microsoft servers, and upgrades for all four CALs. Wow. What. A. Deal. So basically we can either do the smart thing and BUY the products and all the assorted useless crap that comes with Microsoft networking (Netware all the way!) that will last us 5-8 years or longer on the same hardware and end up paying a fraction of the overall yearly costs, or we can subject ourselves to the Microsoft Upgrade treadmill and castrate ourselves with more of their restrictive licensing. Except THIS time foregoing an upgrade isn’t an option… which means that foregoing hardware upgrades aren’t an option either. Upgrade costs under Select and Open Agreements rose with Software Assurance, the controversial licensing policy launched in 2001, which eliminated upgrade discounts. Ballmer and other Microsoft executives have admitted that the Software Assurance introduction wasn’t handled well and the company has since spent $20m trying to better explain the program. In other words, people realized what a crappy idea going with SA was, so Microsoft decided to spend $20 mill on a marketing campaign to convince the PHB’s and CIO’s that SA was somehow a ‘good thing’ EAs are also far easier to manage. Licensees count how many computers they have worldwide and buy a license for each. Unauthorised use is also eliminated because customers obtain the right to use any version of Windows, Office or a CAL that comes out during the three-year period. Oh, so THAT’S what this is all about! Yeah, it figures. Just keep feeding Microsoft money and they’ll take care of your licensing problems! In turn, blanket standardization makes it easier to manage information technology assets, said King at Magnatrax. The key selling point for the company’s board was the fact that, by making desktops uniform, it would ensure that all employees could access enterprise-wide applications deployed later on. Vendor lock-in is good! DeGroot said the deals can reduce interest in experimentation with alternatives because all desktops have Windows and so fewer customers will be inclined to try Linux. This is probably the most honest statement in the entire article. Surprisingly it comes from the mouth of an anal-cyst In an interview in February, Ballmer disputed that Microsoft makes more on EA deals, while affirming the program was good for resellers. “For us economically it is the same. For our partners, I think there is a chance, I actually think their profit margin per account is probably also about the same either way,” he said. I’ll BET it’s the same. The problem is, of course, that many companies feel that the current “upgrades” are unnecessary and don’t feel the need to spend more money on worthless feature-ware with higher system requirements. Obviously Microsoft can’t have that. They need the constant cash flow so they can cover their losses on the other 5 divisions they aren’t making money on. The solution to that problem is … Software Assurance and Vendor lock-in! Or maybe i’m just being too cynical. Nah! 2003-06-18 5:59 pm Hey Jim, don’t beat around the bush, tell us what you REALLY think! 🙂 2003-06-18 6:10 pm Perhaps one of these days MS will realize that it has to compete, and have to be both better & cheaper than its competitors. Right now it seems like they’re losing hand over fist with regards to the TCO arena. The true fact is that per machine it’s cheaper to maintain a widely deployed linux solution than an MS one. The only trouble a company runs into is the costs of overcoming a self imposed lockin into MS products. MS has been betting that companies will forego the costs of migration and ante up. Of course if the competition already migrated or didn’t need to migrate then there’s the problem of being competitive. I read in a article recently that mentioned that Linux server shipments made up ~14.1% of the market for some period but only made up ~5.1% of revenue. So at least in the server arena initial deployment of Linux is ~1/3rd cheaper, with no ongoing licensing costs. Desktop deployments are even less, assuming one buys only one redhat license and deploys that with openoffice or abiword/gnumeric. The ultimate question seems to be: how much does current vendor lockin (from MS products) cost? 2003-06-18 7:17 pm <Microsoft’s Direct Approach Saves Businesses Money> Open Source frees the costumer, M$ fries the costumer. 2003-06-18 11:52 pm with .Not out and news OS and database out M$ is out to grap more money out of your pocket it will be slow and painful to you. There will be atleast 6 releases and numerous patches for this and M$ will decide on the fly to drop everything and start another new .Notfarm to make more money. The cycle repeats consumer losses and M$ gets rich. 2003-06-19 7:22 pm The entire tone of the article and the information supplied… there’s very little to make it seem like a legitimate story about a legitimate analysis of MS’s “offering.” By the way, Anonymous… the comment that you quoted back to Eugenia (the one in the OSNews item) comes right from the actual story and wasn’t written by her. It’s the article trying to sell MS’s story (as paid-for sounding as possible), not Eugenia (granted, it sure comes off as a wonderfully sarcastic statement, despite not actually being one).