Microsoft deals as fiscal year closes

Computerworld - Corporate users who have dragged their feet on signing up for Microsoft Corp.'s controversial new volume-licensing program might want to get into negotiation mode this week.

Microsoft's fiscal year ends June 30, and some analysts and enterprise customers said the software maker has become increasingly flexible.

"They're quite a bit more amenable to giving concessions than they were even two months ago," said Julie Giera, an analyst at Giga Information Group Inc. in Cambridge, Mass. In the past six weeks, some of her firm's clients have reported bigger discounts on licenses and the bundling of free or discounted consulting and training, she said.

Giera couldn't say whether that's because the fiscal year is ending or because Microsoft sees many users still undecided about its new licensing program as the July 31 deadline for important software upgrade options looms.

But Microsoft CEO Steve Ballmer acknowledged that his company has been "making deals" (see story). He declined to specify which items are negotiable, but he said support has been an element. Support isn't typically included in Microsoft's software maintenance program.

"If there are customers that have issues, of course we're going to try to earn that customer's trust by creating a win-win situation," Ballmer said. "And we've done that many, many, many dozens of times with customers as they have evaluated our new license."

Pacifying Customers

Ballmer himself has gotten involved. He told Computerworld that several months ago, a large manufacturing company in Germany complained that the new licensing plan would cause its costs to increase by a percentage it had no intention of paying.

"I said, 'That sounds very reasonable. We're not trying to do that to you, so let's try to find a path,' " Ballmer recounted. "It took us three weeks after I visited. The team had an appropriate arrangement."

Microsoft has worked to pacify many customers since introducing its Version 6 licensing program just over a year ago. At that time, officials claimed that the new plan would simplify the software maker's complicated licensing scheme, ease software administration and license tracking, and even provide a potentially appealing subscription option (see story).

But customers lashed back, often complaining about the lack of advanced warning about the new plan and potential cost increases they might incur, largely due to the elimination of a popular version upgrade program on Oct. 1.

In response, the software maker twice extended key deadlines and this year is devoting $20 million to a worldwide education project that aims to reach every volume licensing customer (see story).