Microsoft Offers Subscription License Option and Simpler Upgrade Program For Enterprise Customers Worldwide
May 10, 2001
Enterprise Agreement Subscription Is First Step Toward Licensing Software as a Service; Upgrades Simplified Through New Software Assurance Offering

REDMOND, Wash., May 10, 2001 — Microsoft Corp. today announced simplifications and improvements to its volume licensing programs, including a subscription option for enterprise customers. Other changes include a simplified approach to upgrades, a simpler sales process, new online licensing management tools and broadened eligibility for the popular Enterprise Agreement (EA) option. The changes to licensing, which take effect Oct. 1, 2001, are the latest in a series of improvements Microsoft is making to its products, support, consulting services and business operations to better align with the needs of enterprise customers.

"As Microsoft has moved from a retail, shrink-wrap approach to more of an enterprise focus, our licensing programs have also needed to change," said Bill Henningsgaard, vice president of Worldwide Licensing and Pricing at Microsoft. " Customers have told us what they want in a volume licensing program: They want flexibility and choice, combined with simplicity when it comes to purchasing, administration and compliance. Our new programs provide consistent offerings with a common pricing methodology, yet they're flexible and responsive so that customers can match the license to their specific preferences -- whether for per-license or enterprisewide acquisition, traditional (perpetual) or subscription (nonperpetual) rights, or even a single enrollment option for enterprise customers who want to acquire licenses and Microsoft product support at the same time.

"I'm excited, too," Henningsgaard said, "that by reducing the requirement to qualify for an Enterprise Agreement from 500 to 250 PCs, we can extend the predictability, ease of management and ease of upgrading provided by Enterprise Agreements to many thousands of additional companies around the world."

Subscription Licensing

A much-anticipated addition to Microsoft's volume licensing programs is a subscription license option for Enterprise Agreements for those customers who are looking ahead toward a transition to software as a service. Subscriptions can be attractive to companies that prefer to spread their licensing costs over multiple years, and for those that see wide fluctuations in computer usage across their company, lease PCs, or wish to treat software as an operating expense rather than an asset. The subscription option is easy to administer because it only requires that companies do a simple year-over-year PC count.

As one of Microsoft's established global account customers, Nestl é worked with Microsoft as a pilot for the new EA Subscription program and license offerings. Nestl é , headquartered in Vevey, Switzerland, has traditionally acquired licenses on a transactional basis through the Select License program. Based on its changing needs as a leader in food products worldwide, Nestl é intends to sign a long-term global Enterprise Subscription agreement.

Harry Clough, head of IS Procurement and Vendor Relations worldwide for Nestl é , said, "Having reviewed the new and revised licensing programs, we felt that the new EA Subscription agreement best met our needs for flexibility and cost-effectiveness."

Stuart Spelling, head of Technology and Standards for Nestl é said, "We had already made the decision to standardize our core desktop and infrastructure server IT architecture on Microsoft products. EA Subscription provided the most cost-effective and flexible way to take advantage of Microsoft's latest and most innovative products."

Software Assurance

A key simplification of the volume licensing program is the replacement of the confusing "alphabet soup" of upgrade options (VUP, CUP, PUP, LUP, UA) with the streamlined Microsoft® Software Assurance offering, which can be acquired for licenses for individual machines or for all of an organization's PCs and servers. Microsoft Software Assurance provides the rights to upgrade to the latest versions of products released during the term of the agreement and will help commercial and academic customers quickly benefit from the very latest enterprise software.

Companies that choose Software Assurance for all future license acquisitions within a product pool will receive the additional benefits of Software Assurance membership, including special offerings from Microsoft Gold Certified Partners (including Alpha Technologies Inc., Interlink Group Inc., Quilogy Inc., Rainier Technology and Sequoia Software Corp.), and Certified Technical Education Center (CTEC) Partners (including Extreme Logic Inc., Hilton Computer Strategies, Information Management Group Inc., Micro Endeavors Inc., Netdesk Corp., Pinnacle Training Corp. and SQLSoft Inc.), as well as access to Microsoft Windows® source code for those customers with 1,500 or more Windows desktop licenses in certain countries.

New Online License Management Tools

Another step that simplifies organizations' licensing is the inclusion of new online license management tools, which will allow volume licensing customers to simply and easily track and manage their license acquisitions via the Internet.

"These new online tools will make it much easier to manage all of our licenses," said Terri Harnish of UGI Utilities Inc., a natural gas and electric utility headquartered in Reading, Pa. "It's great that with these new tools we don't have to manually count up the licenses. They are all quickly and accurately summarized for us, saving us time and money."

New Streamlined Sales Process for EA Customers

Microsoft is introducing a streamlined sales process for EA and EA Subscription customers, providing a new integrated enrollment contract that will allow customers to acquire their licensing and Microsoft product support needs in a single transaction. Customers will be supported by Enterprise Software Advisors, which will provide license program support, core software asset management services and a range of additional value-added services. The new EA licensing process will be introduced Oct. 1, 2001, and will be available initially in the United States, Canada and Western Europe.

Cost Impact on Customers

The improvements to Microsoft's volume licensing offerings are designed to match the current acquisition behavior of the majority of Microsoft's enterprise customers, and should result in a reduction or no change in licensing costs for approximately 80 percent of Microsoft volume licensing customers. Organizations that currently upgrade less frequently than the average could see their costs increase, or they have the option to enroll in Software Assurance which provides the most predictable and cost-effective way to stay current with the latest software releases.

Customers interested in Microsoft's new licensing programs should contact their Microsoft sales representative or reseller. They can also find information on the Internet at http://www.microsoft.com/business/licensing/ .

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