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Q&A: Microsoft's Bill Landefeld on Software Assurance changes

The goal was to add value to the licensing package

By Carol Sliwa
May 28, 2003 12:00 PM ET

Computerworld - Microsoft Corp. disclosed this week that expanded training, support and management benefits will be available as of September for companies that purchased Software Assurance agreements for upgrade rights to its products. Bill Landefeld, vice president of worldwide licensing and pricing at Microsoft, spoke yesterday with Computerworld about the additional benefits. Excerpts from that interview follow:
Under the Software Assurance program, customers pay an annual fee for upgrade rights to Microsoft products, but the upgrade cycle has been somewhat slow for some products. Did that put pressure on you to add value to Software Assurance? There's always pressure on us to deliver for our customers. Did the rate of the upgrade cycle put more or less pressure on us? I would say no. ... Really, what this is in response to is customer feedback after the Licensing 6.0 rollout, in terms of what more they expect from a vendor like Microsoft through a Software Assurance type of program.
Under Software Assurance, customers pay an annual fee of 25% of the volume-license fee for server products and 29% for desktop products to gain upgrade rights to products. Several people have complained that other vendors charge a lower percentage fee and include support with it. Did Microsoft look at competitive offerings and try to do something that was comparable? We're always listening to customers, and certainly, our customers keep us very aware of what our competitors are offering. So yes, we definitely look at the industry. We see what our competitors are doing. Our competitors are changing all the time, and this is a fast-moving industry.

Bill Landefeld of Microsoft
Bill Landefeld of Microsoft
In response to the percentage rate, I think the important thing to look at is, a) what's included in that, and b) what is it a percentage of, rather than just the actual percentage rates. Particularly on the server side, customers look at offerings from Oracle or from IBM, compare them with what we have at Microsoft, and that's really where the industry precedent has been set for including support with upgrade protection and security and maintenance updates as well.
The one thing that we're very pleased about is that we give customers a choice whether to include services in their software upgrade purchases or not. You can't get upgrade protection without buying services from several of our competitors.
I think our Software Assurance percentage rates, if you just look at that, are actually pretty close to where Oracle and IBM would come with our new offering here, in the low to mid-20s. So I feel pretty good about

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