Forced march
- Article 19 of 77
- Information Age, October 2001
The launch of Windows XP once again shows how Microsoft – in common with a host of other software suppliers – expects customers to upgrade to new releases of its software without question. Is it wrong to do so?
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“Theoretically, there is a 'do-nothing' option,” says David Roberts, chief executive of The Infrastructure Forum (TIF), a group that represents the views of large customer organisations to the IT industry and government. “But that is only temporary. Even small businesses can only survive on their existing software for a while. But we live in an environment where we have a high dependency on software. All the software from third parties will be upgraded sooner or later so that they require Microsoft's latest OS. So you can do nothing for six months, or even 12, but you will have to upgrade [eventually].”
Indeed, Microsoft's own products have a tendency to require the absolute latest operating systems to run. Exchange Server 2000 and the SQL Server 2000 database, for example, only run on Windows 2000 because they need access to Windows 2000's Active Directory services, whereas their predecessors ran on NT 4.0. To obtain the extra capabilities of SQL and Exchange Servers 2000 – which included bug fixes for their existing products – users had to upgrade to Windows 2000, even though NT 4.0 worked well for them. In fact, one of the selling points of Windows 2000 itself was the “tens of thousands of bug fixes” to NT 4.0 that the product incorporated.
But even that is not enough to encourage companies to upgrade.
Development company Wind Gap Technology Group provides IT services to a Fortune 500 company that is rolling out Windows 2000 desktops around the world. According to John Murdoch, a Wind Gap consultant, this company is not even piloting XP. “All XP gives you is some easily ignored bells and whistles, and the ability to use joysticks,” he says. “Microsoft wants them to upgrade, but can't make a compelling case for a whopping upgrade expense, plus the cost of actually installing the OS, labour, and so forth, in a time of tightly trimmed budgets and layoffs. A senior manager said to me, 'We just announced we're whacking 200 people. If we spend three million bucks installing XP, we're going to have to whack another 40. Is the ability to use a joystick worth those people's jobs?'”
The problem is not confined to Windows XP, though. Eight out of 10 users do not plan to upgrade to Microsoft Office XP for at least another six months, according to a recent survey; a third of respondents said they would never upgrade; and half of those that do not plan to upgrade say they are happy with their current version of Office. According to CIO Connect's Handby, “a lot of companies don't use the capabilities they have right now. People email extensively, use spreadsheets and word processing. Why should they want to upgrade to another product whose functions they are not going to use?”
Microsoft has seen the problem coming for some time and, in May 2001, announced its solution. It was going to “simplify” its licensing, a simplification which came into effect in September. Companies can now choose one of two options: buy full licences for all their future software – albeit at a reduced price if they take out a volume licensing agreement – or rent software via an annual subscription service called Software Assurance (SA). SA is approximately 25% of the price of a full licence for a server product and 29% of the price of a desktop product, and gives the purchaser the right to use the current version of a product for a year. But for an organisation's existing software to qualify for SA, they have to be using the latest version: for Windows, that is Windows XP and for Office, Office XP.
Microsoft claims its new licence schemes simplify the existing system and will prove to be the same price or cheaper in most cases. “Based on our volume licence purchases across all products, this may represent a price increase for 20% of licence purchases – those who update infrequently,” claims Microsoft's UK licensing manager Duncan Reid.
Customer mutiny
But not everyone sees it the same way – especially users. “As a result of the recent price increase and change in licensing, we were forced to commit unbudgeted dollars this year towards maintaining the products that we have,” says Lloyd Love, vice president and CIO of AMCOL International Corporation, an international mineral supplier. “We will focus on alternatives to Microsoft products before [we consider] moving forward with any new products from Microsoft.”
George Ryerson, director of information technology for WestFarm Foods, accuses Microsoft of adjusting “its upgrade/profit strategy at the expense of customers.” Until there is a value proposition, he says, WestFarm will not change to XP.
TIF's David Roberts says that no company in his membership is expecting costs to decrease as a result of the change in licensing. “As far as we can tell from our members, it will be a 94% increase in cost for any company – certainly any organisation with 250 or more desktops. Unfortunately, most organisations don't know it.” And David Rippon, chairman of Elite, the British Computer Society's specialist forum for IT directors and senior managers, estimates that the total cost to the UK economy of Microsoft's licensing changes will be £800 million per year.
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