News

Ballmer Owns Up to Microsoft Licensing Flap

• By Joe McKendrick
• October 09, 2002

Microsoft CEO Steve Ballmer had a lot of explaining to do about Microsoft's new licensing and Software Assurance policies Wednesday morning at Gartner's ITXpo/Symposium, being held in Orlando, Florida. Owning up to customer disenchantment with Licensing 6.0, Ballmer admitted that the process and ensuing customer pushback resulted in a "lot of learning for us." The CEO also provided further clarification to Microsoft's .NET approach, stating that the intention of the architecture is introducing XML into Microsoft's products.

The original intent of Microsoft's enterprise licensing changes -- enacted this summer -- was to "simplify our licensing," Ballmer asserted. "We used to have things that people didn't understand. "We still have customers today who would tell us, 'We can't understand your licensing agreements; they're too long, too complicated.'" As a result, he said, Microsoft sought to simplify the agreement, a process that may have backfired. "We learned sometimes when you clean things up and simplify them, you can wind up costing some customers more money, and that's problematic," he said.

He added, however, that since the new program began in July, "a very high percentage of all of our customers engaged under out new licensing program." Responding to Gartner estimates that up to 40 percent of PC costs go to a "Microsoft tax," Ballmer pointed out that "Microsoft software, for a typical large account, would still represent significantly under 2 percent of the total IT budget."

Ballmer said that the new program offers upgrades on all major products, including Windows, Office, and new server releases. A new program, Microsoft's Software Update Server Technology, is also being provided to Software Assurance customers.

Ballmer also defended Microsoft's Software Assurance program, stating that it "was very popular with customers. Software Assurance gives the customer a right to all patches, all fixes, all upgrades, all of everything that we do with that product." Many Microsoft customers are enrolled under Enterprise Agreements, which are the same as Software Assurance agreements, said Ballmer. "We do recognize the opportunity, the desire, the requests, and the needs, to ensure that we are delivering more continuous values as opposed to just big, lumpy upgrades." Software Assurance will be delivered as patches and fixes, as well as tools that will support internal Windows updates.

Ballmer also said he would revisit the issue of software vendors not permitting end-users to publish performance benchmark data, another hot button in the software industry. However, he claimed, "no enterprise customer has ever asked us about this."

Ballmer also addressed a Gartner analyst's comments that .NET is a confusing vision for many companies. "We have a core of technologies that comprise the key platform or building blocks for Microsoft, and we build businesses around that," he said. "Windows has been in that core, and now we're infusing, into the core, technologies to help people to take advantage of the XML revolution. That's what .NET is. Just like DOS was in that core in the early 80s, and we infused Windows. And Windows was in that core, and we infused IE and Internet capabilities. Now we're infusing .NET to take advantage of the next revolution in computing, which we think occurs around XML."

Ballmer sees innovations coming from the areas of user interface technologies -- including tablets and voice recognition -- as well as improved collaboration. The integration of XML standards also represents a "big breakthrough" in Microsoft's Office suite. Microsoft's growth will also come from supporting knowledge workers. "Business intelligence is very much on people's minds," he added. "I think the world's only scratched the surface in terms of technology to help with business intelligence."