Cloud Customers Demanding Better Terms From Microsoft

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In Microsoft's race to add high profile cloud computing customers, and keep them away from Google, the software giant is making unprecedented concessions to get deals done. The software giant's newly forged contract with the city of New York, which will save the Big Apple $50 million over the next five years, is the latest example.

But the New York deal isn't just about cloud computing, it's also a reflection of Microsoft customers' discontent with Enterprise Agreements (EA), as well as state and local government's willingness to leverage the Google threat to coax more favorable terms out of Microsoft.

"We took advantage of the competitive moment," Stephen Goldsmith, New York City's deputy mayor for operations, told The New York Times Wednesday.

For customers, EAs offer blanket software licensing coverage and make it easy to manage desktops throughout an organization, and they also comes with significant volume discounts. However, customers rarely use all of the software that's covered under an EA, and the discounts don't always make up for the over-licensing.

In the past, large customers have simply had to live with EAs because the cost of managing desktop software without an EA was too high, notes Paul DeGroot, an analyst with Directions On Microsoft, Kirkland, Wash. "It looks like New York didn't want to live with it, and got it their way," he said.


Next: What Microsoft Gets In Return

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