Partners: Backlash Likely From Vista Enterprise Licensing Plan

Windows Vista Enterprise is one of six versions of the Windows client upgrade expected later this year. The enterprise version, as well as the upcoming Windows Fundamentals for Legacy PCs will be available only through Software Assurance, Microsoft's software maintenance program.

"There will probably be some pushback on that. There's already been pushback on buying Software Assurance because there's no guarantee [software] will be released during the term of the customer contract, " said David Orvis, license management services strategist at Software Spectrum, a Plano, Texas-based solution provider and major Microsoft reseller. "In some cases, it will help Microsoft get Software Assurance contracts. But Vista Enterprise being an entitlement only on SA? It will be a major issue. But I don't know how much of a backlash there will be."

The new Software Assurance benefits and requirements for 2006 are slated to go into effect in mid-March, Microsoft told CRN last week. The company said most of its enterprise clients buy Enterprise Agreements [EAs] and won't be affected by the new requirement, since EAs bundle in Software Assurance, commonly referred to as SA.

Not so, say Microsoft partners and industry analysts, who expect some opposition to the requirement. Research firm Gartner estimated that only 50 percent of Microsoft's business customers buy Software Assurance. That's a small percentage compared with other large software vendors, said Alvin Park, a Gartner analyst.

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"Microsoft is making Windows Enterprise an entitlement of Software Assurance, and before you could buy it separately," Park said. "This affects a significant number of [Gartner] clients that have presence across the globe, multinational companies." For example, the new requirement would impact any customer that needs Windows' multilingual user interface (MUI) and customers who want to use Virtual PC Express and Unix subsystem to run legacy and Unix/Linux applications on Windows, he noted. Those features come with Windows Vista Enterprise.

Still, Microsoft isn’t doing anything that other vendors haven't already done, Park added. "There's no additional cost as long as you renew your EA, but a lot of folks that don’t have EAs now have to go get one," he said, noting that about 60 percent of Microsoft's installed base has EAs. "A lot of people don’t buy SA, and Microsoft is trying to increase the uptake of their maintenance. Other software vendors have 90-plus percent uptake of their maintenance offering, and that's not true for SA. SA has been struggling for the last five years."

One partner said the requirement would irritate customers who don't have EAs or don't subscribe to SA, but it’s one way Microsoft could improve SA’s image and shift customers to annuity-based contracts.

"If Microsoft is truly forcing Software Assurance to get the Vista Enterprise Edition, either the value including in Enterprise or the value of Software Assurance has to be worthwhile," said Ken Winell, CTO of Visalign, King of Prussia, Pa. "Most of our clients have Enterprise Agreements in place and will get this."

Customers will be eligible to purchase Windows Vista Ultimate--the high-end version of Windows that combines all business and consumer features--without Software Assurance, but many businesses won’t want to pay more for consumer features that employees won't use, according to industry observers.

Analyst Rob Enderle, principal of the Enderle Group, said Microsoft is taking another gamble with its controversial licensing program and will have to prove its case--or face more headaches. "Many customers have been increasingly feeling that Software Assurance isn't a good value, and a growing number have indicated they would discontinue using this as a result," he said. "Microsoft is trying to build back in clear value so this doesn't happen, so they can pull customers back in. The key will be whether the customers see the value or see this as a tax. If it is a value, they will move back to SA. If they see it as a tax, they will defer deployment of Vista for as long as possible."

Delays in shipping SQL Server 2005, for example, upset some customers who bought SA contracts that expired before the database actually shipped, said one partner who asked not to be named. However, other partners who serve large customers said it won't bother most of their clientele.

"I haven't heard anyone being upset with the decision," said Scott Golightly, senior principal consultant in the Utah office of Keane, a Boston-based IT services firm. "Most people are either part of an Enterprise Agreement, or they are not using the MUI."

Microsoft also plans to make Windows Fundamentals for Legacy PCs available only through SA, but partners said they likely won’t mind that much because the “light” Windows client isn’t attached to a hardware buy. The thin client, developed under the code name Eiger, is aimed at customers who want to upgrade their Windows clients but don't want to buy PCs. The Windows XP Service Pack 2 version of that client is expected to ship soon.