Microsoft denies software assurance exodus

Contrary to reports that Microsoft claims that it is seeing record high renewal rates of its enterprise software agreements.

In a posting on a company website, Joe Matz, corporate vice president of Worldwide Licensing and Pricing, said that renewal for the company's Enterprise Agreements " exceeded the high end of our historic range of 66-75 per cent".

Enterprise Agreements are Microsoft's volume licensing programme for large companies. The programme includes a mandatory subscription to the Software Assurance programme. The latter entitles customers to free upgrades for their software at a fee of 29 per cent of the original licence. A user who paid $200 for his copy of Windows Vista, for instance, will have to pay US$58 each year thereafter for potential updates.

Both Forrester Research and Gartner have recently pointed to rates of customer dissatisfaction with the Software Assurance programme. Given the large delays in the release of Windows Vista, many contracts have expired without the user ever having the benefit of receiving an upgrade.

The high renewal rate suggests that the researchers are wrong. In the posting on the Microsoft website, Matz went so far as to suggest that customers should rely on the company's salespeople and partners for "direct and accurate information" that considers their unique individual situations.

Paul DeGroot, a lead analyst covering sales and marketing for analyst firm Directions on Microsoft, said that he was surprised by the high renewal rates.

"The lesson here is that customers don't have a lot of good choices," DeGroot told vnunet.com. He suggested that customers subscribe to Enterprise Agreements, and therefore to Software Assurance, because the programme entitles them to use applications on any number of systems. The alternative requires a regular audit of all systems to ensure compliance.

"Getting out of Enterprise Agreements involves a fair amount of work and planning. It's not something that you just stop doing. If you don't plan, there's a good chance that your company is out of compliance with its licensing. "

Customers don't really care for the right to upgrade that Software Assurance provides, DeGroot alleged. But an Enterprise Agreement with the forced bundling of Software Assurance is typically still less expensive than a regular software licence.