In The Driver's Seat

"June's [Enterprise Agreement 6.0 business was extremely robust," said Paul Jarvie, president of ASAP Software, Buffalo Grove, Ill. "It was our best Microsoft month by a good margin; the number of agreements that were closed through ASAP was larger than in any previous month or quarter," he said. "Clearly, the July [31 deadline factor kicked in a month early."

Jarvie said that while first-time agreements tended to be smaller than in years past, the volume of new contracts made up for any decrease in average size.

AssetMetrix, an Ottawa-based Microsoft partner that offers a hosted inventory and software asset management service called LicenseTracker, is seeing an increase in business as customers rush to inventory their Microsoft software before negotiating their Licensing 6.0 deals.

"Our business has been ticking up dramatically, and there have been a lot of catalysts, including Microsoft's compliance letters that were sent out," said Paul Bodnoff, president and CEO of AssetMetrix.

Dell Computer's Microsoft licensing business is also on the upswing, aided by incentives Microsoft is putting on the table, said Melissa Porter, Microsoft licensing marketing manager for Dell's preferred accounts division.

"Our business is way up because of the deadline. In the past two months, business has been better than average because customers are incented to purchase before July 31," Porter said.

Microsoft is offering pricing incentives including training vouchers and special leasing offers to generate new contracts, she said.

In addition, Microsoft is negotiating special deals to rein in the most reluctant customers, solution providers said.

Kevin Wilson, vice president of sales and marketing at Emerging Solutions, a professional services division of Entre BTG, said he expects his Microsoft licensing business in the Southeast region to increase 60 percent in the current quarter on a sequential basis as the deadline looms.

"It's causing a lot of people to shift budgets here at the last minute, which has been a headache for some companies," Wilson said. "Most businesses are finding monies or doing some creative financing to come up with some monies to get current. If they don't, it's going to cost them two to three times more in the long run."

Microsoft executives said they were pleased with the results of the licensing push so far. At a meeting at company headquarters last month, Orlando Ayala, group vice president of the Worldwide Sales, Marketing and Services Group at Microsoft, said licensing adoption has grown significantly over the past quarter.

"We're seeing a good push," Ayala said. "I've seen a doubling in growth in the past three months."

But it's unclear how the last-minute rush to Licensing 6.0 has impacted the company's fiscal quarter and year, which ended June 30. Results are scheduled to be announced this week.

Robert Becker, an analyst at investment firm Argus Research, said any rush by customers to Licensing 6.0 won't do much to offset the tough economic climate software companies are facing.

"The quarter is most likely to be weak due to the overall economic climate. Changing licensing terms is a secondary issue," Becker said.