Welcome to Microsoft Licensing 6.0

   Beginning tomorrow, Microsoft will institute its Licensing 6.0 scheme, the oft-delayed and -maligned new software-purchasing program for corporations. The program is the first major change to the way that Microsoft sells software to occur in half a decade, but many of the company's customers remain unimpressed with the plan, which has come under criticism for requiring that companies opt into lengthy software contracts. Microsoft, however, says that the move to Licensing 6.0 was necessitated by the complexity of its previous volume licensing practices, which awarded large customers with steep discounts. According to some reports, Licensing 6.0 effectively raises prices by 33 to 107 percent over the previous scheme. This sad state of affairs has predictably alienated many of the software giant's customers, some of whom are now actively researching Linux and other open-source alternatives.

Microsoft maintains that Licensing 6.0 is simply misunderstood, and though the company twice delayed the start of the program to ease the transition, the midnight deadline tonight is final. Starting tomorrow, Licensing 6.0 is Microsoft's only option for corporate customers. "The fact that our customers probably didn't understand our licensing as well they might have earlier makes the transition and the perceived pain higher than it actually is," Microsoft CEO Steve Ballmer said during last week's annual financial analysts meeting at the company's Redmond campus.

Under a Licensing 6.0 option called Software Assurance, corporate customers can sign up for regular, subscription-like payments over a 2- or 3-year period. This option gives customers access to the most recent Microsoft software whenever it's released and provides Microsoft with a steadier income stream. Alternatively, customers can opt to simply pay full price for software on their own schedule. Many companies that have evaluated the plan have found that they will pay more than before regardless of which option they choose. And they complain that Microsoft is trying to smooth its financials by essentially forcing customers to upgrade more regularly, raising future sales figures for cyclic products such as Windows and Office in the process.

Regardless of opinion, Licensing 6.0 will likely prove very successful for Microsoft. After all, what other options do its large customers have? Of course, the new licensing plan might have the opposite effect: Instead of being forced into more frequent upgrades, tight-fisted corporate buyers might opt to use older technologies longer, effectively lengthening the time between upgrades. For more information about Licensing 6.0, see the Windows & .NET Magazine articles by Kathy Ivens, "License 6.0: The New Deal," and Michael Otey, Editorial, "Licensed to Thrive?"