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Microsoft Tweaks Licensing

Microsoft plans to unveil changes to Licensing 6.0 this week that would steer more customers to buy Software Assurance upgrades in its 2004 fiscal year, said sources familiar with the plans.

The company is expected to throw in some free technical support, as well as some value-added options, with Software Assurance contracts to reduce its software's total cost of ownership, the sources said. Microsoft now charges separately for Software Assurance upgrade protection and various levels of tech support, including perincident calls.

"Microsoft has mulled over the concept of increasing technical support, and there's an unflattering comparison between the price of their upgrades and support vs. the competition," said one source briefed on the changes. "It's been a struggle for them to figure this out. There are real costs associated with this, and support is expensive for everyone."

A Microsoft spokesperson confirmed that the company intends to announce Licensing 6.0 changes this week but declined to elaborate.

Industry observers say Microsoft wants to be more competitive on software costs with rivals such as Oracle and IBM. Since unveiling Licensing 6.0, Microsoft has faced a barrage of criticism from customers and analysts.

An annual Oracle software and maintenance pact,including upgrades, patches and tech support,is about 22 percent of the cost of the license, whereas Microsoft upgrades under Software Assurance start at 25 percent "without any tech support at all," sources noted.

"Right now, customers can pay for SA for two or three years and get virtually nothing for it," said a source briefed on Microsoft's plans.

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