News

Microsoft Offers Windows 7, Office 2007 Discounts

• By Kurt Mackie
• January 04, 2010

Microsoft opened the new year with marketing push designed to wean small-to-medium (SMB) organizations off its older Windows and Office products.

The company is offering a 50 percent discount on the first year's subscription price of Windows 7 Professional and Office 2007 Professional software licensing to SMBs. The deal applies to a specific volume licensing program called "open value subscription," or OVS. Organizations have to be upgrading from older Professional versions of the operating system and productivity suite to take advantage of the deal.

The offer, which was described in a blog post by Microsoft Worldwide Partner official Eric Ligman, is available until June 30, 2010.

Microsoft describes the deal as a "50 percent Up-to-Date discount," based on "estimated retail prices." However, pricing under the Up-to-Date (UTD) program is typically less than the box price found in retail stores, according to Paul DeGroot, research vice president and channel licensing strategies analyst at Directions on Microsoft.

"Microsoft uses the term, 'estimated retail price,' in volume licensing programs to mean what I would call 'estimated volume price,' which is discounted from the box purchased from Best Buy et al.," DeGroot explained by e-mail.

Microsoft sweetened the Up-to-Date deal by allowing organizations to upgrade from products that are two generations removed. Microsoft describes this deal as "N-2," meaning that the discount is available to users upgrading from products that are two generations older than the current release. That's the big change in this latest offer, according to DeGroot.

"What's new is the N-2 bit," DeGroot explained. "In the past, you only got the discount for a relatively recent copy of the software. Since all of Microsoft's subscription licensing programs include SA [software assurance], subscriptions give the right to the current (N) version of the software. The UTD applied previously to N and N-1. Now it applies to N-2."

So organizations using Windows Vista Business or Windows XP Professional can upgrade to Windows 7 Professional at half the estimated volume price of the software.

Likewise, the deal allows SMB volume licensees of Office 2003 Professional or Office XP Professional to upgrade to Office 2007 Professional at the discounted price. The OVS licensing includes the software assurance option, which means that there will be no additional cost associated with upgrading to Office 2010. However, Office XP users have to act before the release of Office 2010 -- which is expected to happen midyear -- to make the leap to Office 2010 at no additional charge.

In a separate blog post, Ligman suggested that OVS represents a less expensive licensing option for SMBs compared with other Microsoft licensing schemes, although he doesn't show the data for his assumptions. SMBs have to have more than five PCs, but less than 250 PCs, to use OVS licensing. Microsoft provides a table showing the differences between its open license, open value and OVS options for SMBs.

DeGroot explained that in contrast to some Microsoft licensing, OVS allows "true downs" in calculating annual licensing costs. So, licensing costs can go down as the number of PCs running the software declines in an organization. Small companies forced to downsize presumably have benefited from such an arrangement, he added.

In general, DeGroot views Microsoft's promo and OVS in a positive light.

"OVS is a good option for small companies that want to stay reasonably current, to keep costs low, and plan to stay with Microsoft OSes and applications for some time," DeGroot stated. "It isn't the best solution for everyone but it's now a slightly better solution for customers who were looking at it."