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Tim Hegedus, senior analyst at Miro Consulting, a Fords, N.J.-based firm that specializes in licensing issues, says Microsoft EA renewals have been on the decline over the past 24 months. "The economy has definitely caused organizations to more carefully scrutinize expenses, and Microsoft EAs are frequently at the top of the list for cost reduction."
In the future, Microsoft could face even greater costs when other state and local governments start demanding similar deals, DeGroot added. That's probably why Microsoft and New York City aren't divulging specifics about the details of their newly forged agreement.
In exchange for its flexibility, Microsoft gets to add the nation's largest city to its roster of cloud computing customers, which will help take the sting out losing out to Google on the Los Angeles cloud software deal last year. Not surprisingly, Microsoft isn't wasting any time crowing about its latest cloud computing win.
"With Microsoft's latest cloud-based productivity and collaboration tools, New York City employees will benefit from having better access to information, improved collaboration and information sharing among city agencies," Microsoft CEO Steve Ballmer said in a statement.
However, it's important to note that New York City was already a Microsoft customer, as was Minnesota, which inked a deal in September to move 33,000 state workers to BPOS. Both appear to be cases where customers are re-upping, and Microsoft is adding cloud computing elements in order to cast these as cloud wins.
Next: New York City Embraces BPOS