A Fine Mess: Microsoft's New Licensing Scheme

Figuring out the new Exchange Server licensing options is about as much fun as doing your taxes.

My head hurts. I've been trying to figure out Microsoft's new Exchange Server licensing and the new programs the company is forcing us into. Let me tell you, anytime Microsoft needs to dedicate an entire Web page and document (see the URLs at the end of this commentary) to helping us figure out Exchange licensing, things have gotten out of control. The big deal that's causing all the confusion is Microsoft Licensing 6.0 (it's pretty sad when even your licensing model has versions). The problem is the complexity of the new scheme. Whatever happened to the good old days of Microsoft licensing—when you didn't need a Juris Doctor to figure out the options? This week, I want to spend some time trying to sort through this mess.

Microsoft launched Licensing 6.0 in October 2001 and offered a transition period until July 31, 2002, during which customers can upgrade their licenses (e.g., Exchange server licenses, Exchange Client Access Licenses—CALs) to the new program, which officially begins on August 1, 2002. In the past, most customers have licensed Exchange under the Open License, Select License, and Enterprise Agreement (EA) programs. Now you must move to new programs under the Licensing 6.0 umbrella: License (L), License & Software Assurance (L&SA), and new EA programs (the company is discontinuing some of the original EA plans). Microsoft has left it to customers to figure out exactly how to update all their licenses by July 31.

The standard L program will be a basic product-usage license and rights. When you choose the L&SA program, you get those features plus Software Assurance (SA), which gives you rights to any future versions of Exchange that Microsoft releases during the covered period. During the transition period, Microsoft is offering SA separately to Exchange 2000 Server customers who are still running Exchange under the old Open License and Select License programs. After July 31, SA will be available only as part of the L&SA program.

This offer definitely provides benefits to customers who are running Exchange 2000, but the offer doesn't apply to Exchange Server 5.5 customers. To remedy this hole in the strategy, Microsoft is providing a program called Upgrade Advantage. UA applies to customers who are running Exchange 5.5 under the old Open License or Select License programs. If these customers purchase UA before July 31, they're eligible to purchase separate SA coverage for Exchange 5.5 after that date. After the July 31 deadline, the only option for Exchange 5.5 customers will be to purchase one of the more costly Licensing 6.0 core programs (i.e., L, L&SA, or EA) when they upgrade.

What's a poor Exchange administrator to do? Well, Microsoft recommends the following: If you have Exchange 2000 server licenses and CALs, purchase SA now. Doing so will supposedly save you as much as 50 percent compared to buying an L&SA license. If you have Exchange 5.5 server licenses and CALs, Microsoft recommends the UA program, which will supposedly save you 28 percent to 36 percent (depending on your current license) compared to the purchase of an L&SA license. Of course, Microsoft ultimately recommends that customers purchase EAs for the highest levels of savings and upgrade protection.

I understand that Microsoft needs to make money and that product licensing is the way to accomplish this goal. However, can't the company make things a little easier? The software industry is headed for trouble when Microsoft's licensing documentation starts to approach the page count of the US Internal Revenue Service (IRS) Tax Code. For more information about the new programs, see the following Microsoft sites or Windows & .NET Magazine articles:

Microsoft Guide to Licensing 6.0—Microsoft Exchange Server
http://www.microsoft.com/licensing/programs/sa/exchange.asp
http://www.microsoft.com/licensing/downloads/exchange.doc

Paul Thurrott, "When Alternatives Make Sense," Windows & .NET Perspectives, May 21, 2002
http://www.winnetmag.com/articles/index.cfm?articleid=25264

Kathy Ivens, "License 6.0: The New Deal," Windows & .NET Magazine, February 19, 2002 Web Exclusive
http://www.winnetmag.com/articles/index.cfm?articleid=24032