A Boon for Competitors

By David F. Carr  |  Posted 2002-07-31 Email Print this article Print

Under its new "Software Assurance" plan, Microsoft has changed the rules for bulk software upgrades. Now, tech managers are deciding how to respond—including some who are simply refusing to participate.


A Boon for Competitors?

Gartner research reports also show Microsoft's new licensing has played a part in a surge of inquiries about StarOffice, the office productivity suite from Sun Microsystems Inc. available on Windows, Linux and other platforms. StarOffice may be a practical alternative, except that indirect costs like retraining will make large-scale migration of users hard to justify. Sun is also using competitive upgrades to get customers to consider replacing some of their Windows servers with Linux-powered server appliances from its Cobalt subsidiary.

"It did make me pause—maybe for all of 20 seconds—and wonder if we should get off Microsoft," says John Hummel, CIO of Sutter Health Group, a large west-coast network of physicians and hospitals and one of the organizers of the Microsoft Healthcare Users Group.

His staff did take a second look at competitive products from Lotus and Novell, but ultimately reaffirmed the decision to stick with Microsoft. However, except for an enterprise license that covers SQL Server, Sutter chose not to buy into a Software Assurance plan and it let its previous Enterprise Agreement lapse. "We decided we're better off waiting and just buying new licenses as needed," Hummel says.

At Apartment Investment & Management Co., a $1.5 billion real-estate investment trust, CIO R. Scott Wesson also found himself reassessing his commitment to Microsoft products because of the licensing change. Although in principle he likes the idea of a subscription model that would allow him to budget more predictably for software costs, he says, "Microsoft really torpedoed that concept this year." It's the right idea, perhaps, but at the wrong price, he says.

Wesson says he estimates his company will pay about 40 percent more for Microsoft software under the new plan. "In this economy, to raise someone's prices that much without some commensurate value exchanged is just heinous," he says.

Wesson has another couple of years to go on an existing Enterprise Agreement license, and he refused Microsoft's efforts to get him to renegotiate under the new terms. He is unlikely to abandon Microsoft technology, he says, but will consider reducing the number of Microsoft licenses he must maintain. For example, instead of running an intranet Domain Name Server on Windows, as is the case today, he might be able to substitute a Linux server.

Wesson also foresees stretching the useful life of Microsoft products farther now that the cost of upgrading has gone up. "That would be a change for me—I haven't skipped an upgrade on Microsoft or any other software product in many years," he says.

David F. Carr David F. Carr is the Technology Editor for Baseline Magazine, a Ziff Davis publication focused on information technology and its management, with an emphasis on measurable, bottom-line results. He wrote two of Baseline's cover stories focused on the role of technology in disaster recovery, one focused on the response to the tsunami in Indonesia and another on the City of New Orleans after Hurricane Katrina.David has been the author or co-author of many Baseline Case Dissections on corporate technology successes and failures (such as the role of Kmart's inept supply chain implementation in its decline versus Wal-Mart or the successful use of technology to create new market opportunities for office furniture maker Herman Miller). He has also written about the FAA's halting attempts to modernize air traffic control, and in 2003 he traveled to Sierra Leone and Liberia to report on the role of technology in United Nations peacekeeping.David joined Baseline prior to the launch of the magazine in 2001 and helped define popular elements of the magazine such as Gotcha!, which offers cautionary tales about technology pitfalls and how to avoid them.

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