Customers Rip Microsoft On Volume Licensing


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On the surface, all was sweetness and light at a TechEd 2005 press dinner in Orlando Monday night.

A handpicked panel of Microsoft customers questioned on stage by Forrester analyst Frank Gillette were all apparently happy campers. IT reps from Johns Hopkins Bloomberg School of Public Health, TSys, Nissan and Virgin Entertainment Group love the company, they love its service, they love its software

But its pricing and licensing? Not so much. Not at all.

After the softball questions Network World's John Fontana pitched a high hard one. Were they all on Enterprise Agreements now? Would they re-up? If so why? If not why not?

Not surprisingly, Microsoft needs to make money, they all agreed. But most of the panelists also blasted the company for its hardball techniques and wished for more flexibility.

One cited a nine-month renegotiation during which "there were not a lot of smiles around the table."

The rep from Johns Hopkins sat this part of the discussion out. Microsoft offers special pricing for academic institutions. But Larry Berger, manager of computer operations for Nissan North America advised customers to take a long hard look at what they're running now, what they need, and what Microsoft has in the pipeline for the next few years. EAs are typically three year agreements.
"If you're not going to be upgrading to a new operating system or making some other significant change over the next three years, you need to look very closely at whether you need such a contract. In our case, nobody was really happy with the end price," he said.

Given that the theme of TechEd seems to be making the life of IT pros easier, this is not a good sign. Especially since Microsoft claims to be obsessed with customer satisfaction.

This is a huge issue for corporate customers—and for Microsoft. Some $2.5 billion worth of volume licenses up for renewal in the current quarter.

Given Microsoft's inability to get key products—Longhorn, SQL Server 2005, Visual Studio 2005, out anywhere near on time, more and more customers are employing hardball tactics of their own.

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