Businesses that want the Enterprise Edition of Microsoft's forthcoming Windows Vista operating system will have to sign up for its Software Assurance licensing program.
Software Assurance, which was first introduced in 2001, encourages customers to pay an annual fee to use Microsoft's software rather than buying outright licences. The annual fee includes software upgrades plus other support services.
The program has been a controversial one and met with considerable resistance after some analysts said customers would end up paying more under Software Assurance than under the previous licensing plan.
It appears now that Microsoft is not just encouraging customers to use the program but requiring them to, at least if they want access to its newest products, analysts said.
"If anyone wants to move onto the next-generation software, then they've got no alternative" but to sign up for Software Assurance, said Michael Azoff, senior research analyst with Butler Group. "It's sort of a clever move by Microsoft."
The change was among several updates announced for the licensing program. Taken together, the updates "extend the value" of Software Assurance beyond a typical maintenance offering, which includes only support and upgrades, according to Microsoft, to something that includes access to support, new product versions and other resources.
The new offerings include consulting programs, extended training, around-the-clock phone support, tools for securing and managing older PCs and new upgrade licensing policies for moving from standard to enterprise editions of its software.
Users say it's not worth it
Kennards Self Storage IT manager Orhan Guzel does not subscribe to Software Assurance because the company only performs upgrades "if there is a reason to". Kennards has 120 Windows XP desktops which were upgraded from Windows 98 more than a year ago. The company only finished upgrading to Windows 98 from Windows 95 in 2003.
"We could have upgraded to Windows 2000 [from 98] which was a good operating system but it was not necessary," Guzel said. "It's not just the cost of the software, it's the pain of upgrading.
"Also, the hardware usually needs to be upgraded. When we went from 98 to XP a lot of computers had to have memory upgraded or be totally replaced."
It is for these reasons that Guzel believes price reduction alone is not enough to warrant the move to Software Assurance.
"Every five years we can justify a hardware upgrade," he said. "It would have to be a really beneficial [software] upgrade to justify it because hardware [today] is more powerful and reliable. Even with office products there needs to be a good set of functionality improvements to justify an upgrade."
Shane Gray, IT manager of manufacturer, Greer Industries, said Software Assurance is a great idea "when you reach critical mass".
"You need more than 100 of everything before it becomes useful [and] we are around 50 desktops, so it's cheaper to buy outright licences," Gray said.
Greer Industries did have Software Assurance three years ago before Gray was appointed, but when he did a cost analysis he discovered it cost around $200 extra per PC, which "wasn't worth it".
"I think Microsoft is having a stab at businesses our size, but whether it is worth it still depends on how many new products you buy and how many upgrades you have a year," he said.