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Enterprises: Get ready to pay to go slow on Windows 10

Details remain murky, but Microsoft's biggest customers will have to pay for a traditional update cadence, say analysts

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Microsoft's faster-paced release cadence for Windows 10 will, as expected, require enterprises to either adapt or pay for the privilege of going slow, several analysts said today.

But the details are cloudy at best, with some analysts believing that Microsoft will use already-in-place mechanisms to charge corporations while others said even that was murky.

"Microsoft has made little crystal clear," said Al Gillen of IDC. "We're not getting specific answers, but Microsoft has not said that upgrades from Windows 7 are free for business."

The problem is essentially about what Microsoft executive Terry Myerson, who leads the OS group, called "Windows as a service" in a two-and-a-half-hour presentation last week.

"Once a device is upgraded to Windows 10, we will be keeping it current for the supported lifetime of the device, keeping it secure, introducing new features and functionality to our customers over time," said Myerson last week. "In fact, with Windows 10 we think of Windows as a service [emphasis added]."

While Myerson's label was new, his description of Windows 10 was not: Previously Microsoft had said it would accelerate 10's release tempo, and unlike predecessors, constantly add incremental features and functionality, and change the user interface (UI) and user experience (UX).

Windows 10, in other words, would more closely resemble mobile operating systems, which are continually refreshed. Consumers will simply receive the updates -- which may be as frequent as monthly -- as they arrive, as most people do now.

Business, however, are leery of that speed. They balked at a one-month deadline last year to upgrade to Windows 8.1, forcing Microsoft to retreat to a four-month window.

Instead of a constant flow of updates, businesses will be able to delay deployment with a pair of alternate tracks. The most conservative of those tracks will let them lock down critical systems so that they receive only security updates, while the other will simply postpone the regular consumer updates for approximately four months, giving organizations time to test the changes -- or at least let others deal with flaws before Microsoft fixes them.

Many enterprises will use both tracks to, for example, update the bulk of their PCs on a four-month delay while keeping a minority in lock-down mode.

As IDC's Gillen said, Microsoft has not spelled out how those tracks will work. But it's clear that they will come at a price.

On its website, Microsoft last week pointed out that businesses must have Software Assurance for what it called "enterprise-grade capabilities," and implied that those include the update process.

"For enterprise customers and partners, we will continue to deliver exclusive value and offer extensive flexibility in how Windows 10 is deployed and managed as Windows evolves to become a service," wrote Jim Alkove, the director of program management for Microsoft's enterprise group, in a Jan. 21 blog post. "For companies that require these enterprise-grade capabilities, Windows Software Assurance (SA) will continue to offer the best and most comprehensive benefits."

Software Assurance (SA) is an annuity-like agreement that comes with a bevy of benefits, notably upgrade rights, in return for fixed payments over the life of the contract. Historically, businesses primarily paid for SA to receive those OS upgrades.

But Microsoft will turn that on its head, said Michael Silver, an analyst with Gartner Research, and require SA to not upgrade immediately. "Certainly, for Windows Enterprise, you'll need current SA and that will get you the long-term servicing release," Silver said in an email reply to questions, referring to the lock-down track. "It's still unclear for Pro, and it's also unclear for the middle update cadence of 120 days."

Windows Enterprise is available only to customers with volume licensing agreements and SA. The Pro edition is a step below Enterprise, and can be purchased in single copies or via volume deals.

Like Silver, Frank Gillette of Forrester envisioned Microsoft offering a two-track approach to Windows 10 updating, but acknowledged that the Redmond, Wash. company has provided "only the barest details so far."

He also thought SA might be the key to delaying updates and upgrades in the enterprise, but wasn't as certain. Another option, said Gillette, would be a true subscription.

"When Microsoft says 'Windows as a service,' that means they believe Windows 10 will have continuous value and that they should get continuous payment," Gillette opined. That "continuous payment" could be in the form of SA or a more straight-forward subscription; Gillette wasn't sure.

But there are certainly solid business reasons why Microsoft might move that way. "That would eliminate the motivation [on the part of enterprises] to skip Windows editions. Microsoft wants to take away the financial and process barriers to upgrading," Gillette added.

Although neither Silver or Gillette said as much, one option for Microsoft would be to require SA for Windows 10 Enterprise, and a new subscription-style payment for Windows 10 Pro, for those who wanted to delay or lock down updates.

Revenue from those subscriptions, whether the traditional Software Assurance or something new, could make up for some of the Windows revenue decline reported by Microsoft yesterday in its fourth-quarter earnings call.

Before Microsoft releases Windows 10 -- its latest timeline is an opaque "later this year" -- it will have to explain its ideas for enterprises and specify the accompanying costs.

Gillen said that would happen: Microsoft has told him it will have an enterprise-specific event or presentation where it will go into detail on the release cadence and its business implications. "But I don't know when or where," Gillen said of the promised briefing.

Copyright © 2015 IDG Communications, Inc.

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