Microsoft Tosses Freebies To License Buyers

May 27, 2003 (02:05 PM EDT)

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Microsoft in September plans to deliver free and discounted software, training, and support to customers who've bought its Software Assurance licenses in an effort to counter criticism that the year-old program has raised prices.

Businesses buying Software Assurance maintenance contracts on Microsoft products will get benefits such as free vouchers for product training, free technical support, and discounted licenses for using Microsoft's business products at home. Some of Microsoft's largest customers could receive as many as 200 free training days, valued at $500 to $1,000 each, and businesses could equip employees with home-use versions of Office, Project, and Visio at $25 per seat--a substantial savings over retail prices, says Rebecca LaBrunerie, a Microsoft product manager.

The additions are designed to quell customers' complaints about last year's changes to Microsoft's licenses that can make it more expensive to keep products current.

Microsoft customers had until last July 31 to comply with new licensing rules that did away with companies' traditional option of buying discounted upgrade versions of Microsoft software. Many customers say Microsoft's Software Assurance maintenance contracts raise the price of owning software, since companies pay a mandatory fee to keep software versions current rather than being able to buy discounted upgrades whenever they choose. As a result of the new program--called Licensing 6.0--Microsoft realized revenue gains during a time when many software companies were slumping.

But in an interview last month, Microsoft CEO Steve Ballmer said customers were confused by the changes. "The pain of that was not worth the gain," Ballmer said. So Microsoft is working "to deliver customers more value and deliver it predictably as part of a Software Assurance agreement," he said.

Starting in September, Software Assurance customers will receive free training software from Microsoft and vouchers for free training courses at Microsoft-certified centers, based on the number of Windows, Office, and server software licenses covered by their contracts. Customers who own standard versions of Microsoft servers will receive free business-hours technical support over the Web for covered products, and users of enterprise editions will receive free phone support. Companies that buy Microsoft's Enterprise Agreement and Select License agreements--aimed at large organizations--can call or log on an unlimited number of times. Microsoft will also sell Software Assurance customers $25 copies of its Office, Project, and Visio desktop software for employees' home PCs, for each business-PC license they own. In addition, Microsoft plans to make new error-reporting and Windows-installation software available to customers.

Market-research company Gartner estimates about two-thirds of Microsoft's business customers have bought Software Assurance on at least some of their products. But companies need to put a dollar value on the September benefits that reflect their operations, analyst Alvin Park says. "Just because you can put a price tag on it doesn't mean it's important to you or that it's worth the price of Software Assurance."