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Microsoft Customers Get No Bang for Buck 328

sammy baby writes "Software missing its ship date is commonplace enough that it's usually only mentioned for yuks. However, subscribers to Microsoft's Software Assurance program are discovering that it can have some very real repercussions. According to NetworkWorld, many licencees are discovering that due to slipping release dates, many thousands of dollars spent on these contracts have brought them zero return."
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Microsoft Customers Get No Bang for Buck

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  • by ackthpt ( 218170 ) * on Tuesday March 09, 2004 @07:04PM (#8514985) Homepage Journal
    According to NetworkWorld, many licencees are discovering that due to slipping release dates, many thousands of dollars spent on these contracts have brought them zero return."

    At what point did these customers forget they are dealing with a software company? Missed dates, slippage, heck, I work as a programmer and there's often good reasons (You can have it now unfinished, untested or with bugs OR you can wait for it to be finished, passed Q/A and tested), granted there are numerous examples of Microsoft using the customer for testing after rollout ("Oh, that bug will be fixed in the next service pack"), but again I don't think they're unique. They're just singled out because Microsoft is a favorite whipping boy. Imagine the losses that may be incurred by (more) flawed code being released on schedule.

    • by Anonymous Coward
      They could offer something like perpetual licensing . . . then there is no risk with slipped schedules. Term licensing is where you get fucked.
      • by ePhil_One ( 634771 ) on Tuesday March 09, 2004 @07:48PM (#8515424) Journal
        They could offer something like perpetual licensing . . . then there is no risk with slipped schedules. Term licensing is where you get fucked.

        Microsoft does offer perpetual licenses. Buy a copy of Windows XP and you are licensed to run it forever. What software assurance offers is an entitlement to all upgrades released while your contract is in effect, only Open Source and a few small titles offer upgrades in perpetuity. Plus, many companies already took advantage of these term to upgrade Windows 2000 workstations to Windows XP, so its not as bad as the headline makes out. Then again, I've successfully negotiate terms in my maintenance contracts that they are valid until Product X is released to cover for slippage, in those cases where the manufacturer was attempting to collect for Product X in advance. I wouldn't be surprised to see MS release Windows YA (NT 5.2) as an interim, just to keep folks happy, Sort of a Windows ME for the NT generation.

        Of course, we also passed on the killer opportunity MS's Software Assurance offered us. We're not racing to be the first on the block with MS's latest.

    • Except, of course, that Microsoft is selling something it bills as a subscription. People expect certain things from a subscription, and regular, on-time releases are among them. I would go so far as to say that Microsoft is being very misleading in calling it a 'subscription' and then not adopting processes that lead to a very regular and predictable release cycle.

      If they can't actually deliver the product, they shouldn't offer it. Of course, I'm sure that when people bought it, there were probably pages and pages of fine print disallowing them from holding Microsoft responsible for anything at all, so I doubt they could be sued for fraud, but that's what'd happen in a normal marketplace.

    • by belmolis ( 702863 ) <billposer AT alum DOT mit DOT edu> on Tuesday March 09, 2004 @07:14PM (#8515086) Homepage

      The fact that software doesn't always come out on time isn't the point. The point is that for a lot of people the main reason to pay thousands of dollars for software maintenance is to get upgrades without having to pay extra for them. If they don't get them, they have reason to think twice about shelling out for software maintenance. They can forgo maintenance and purchase upgrades when they come out if they decide that they are worthwhile, or they can use FLOSS products, where with luck somebody else will improve it, and where if necessary they can make improvements themselves or hire somebody else to do it. Microsoft's delays are reducing the reason not to go with these alternatives.

    • The problem isn't simply bogus, er, standard software industry release dates, and waiting until a product is ready.The problem is taking money for vaporware. Microsoft sold companies "upgrade" contracts, and then hasn't upgraded the software before the contracts expire.

      Now, legally, the companies getting screwed have no recourse. The contracts are worded so Microsoft doesn't have to actually provide the upgrades they announced. But there was a lot of implying that Software Assurance would cover your next round of upgrades. Since it hasn't for most customers, it is going to be a hard sell to get these customers to renew.
      • by NoMoreNicksLeft ( 516230 ) <`john.oyler' `at' `'> on Tuesday March 09, 2004 @07:20PM (#8515150) Journal
        Won't be a hard sell at all... what else is there to buy?

        Don't start yelling linux or BSD, nice as those OSs are... think like a dilbertesque pointy haired manager. There is only windows. And M$ is doing things so that you may not even be able to buy anything other than the subscription....
        • by Daniel_Staal ( 609844 ) <> on Tuesday March 09, 2004 @07:42PM (#8515360)
          Won't be a hard sell at all... what else is there to buy?

          Simple: The normal licence. Microsoft is still selling those. The 'subscription' is cheaper, if Microsoft updates on a regular schedule and you use every update, but if they don't, or you don't, you can just buy the software when it comes out.

        • There are some natural limits to how much Microsoft will be able to cheat those PHBs, though. Even a PHB understands that paying money for no product is a waste. Once the shiny PHB magazines start talking favorably about some alternative to Microsoft, especially if it's presented as the latest greatest thing, the PHBs will start to run away from MS with the same lemminglike fervor that they started running toward it with years ago. At that point, the Microsoft empire will be finished.

          • I think that the shiny PHB magazines may not actually run truly favorable stories. The whole underhanded SCO funding scandal shows just what lengths M$ can and will go to, when it comes to sabotaging open source.

            Hell, even the SCO trial itself scares me. I know there is logical, sensible way that any of their "interpretations" could be found true... but something is still going on. We're only a few bribes away from some congressional rider giving SCO such rights.
      • Wanna bet? (Score:5, Interesting)

        by SmallFurryCreature ( 593017 ) on Tuesday March 09, 2004 @07:46PM (#8515407) Journal
        I think you put to much faith into CTO's. After all there has been plenty of warning this could happen. Did they listen? No. The kind of people that signed are the ****** who believe in "roadmaps". I have even seen them critize Linux for providing roadmaps/timelines and claiming this is why MS was better.

        Small problem. There is a huge difference between publishing a roadmap/timeline and keeping it. Software is sadly a hugely complex product. Worse it is horribly interconnected meaning that it takes forever to properly test and you can bet the moment it is out someone comes accross a situation you never though off.

        But this is well known. So nobody in their right mind counts on a software product being released on time or in a promised form. Like the real world you only trust what is actually right there in front of you.

        Would you buy a car that during the testdrive fails the brake test but they promise they fix it in yours? Of course not. So why do you buy software that you tested as broken but they will fix it in a patch they are going to make?

        This is even worse. This is like buying a car on the promise that if they come out with a better model in 3 years they will give you that one.

        No the people who signed up for this are MS junkies of the worst kind. They will signup again cause it is easier then thinking. Worse if they don't signup again they will have to admit they weren't thinking the first time. Signup again and all they gotta do is gloss over the fact that nothing was received in return. That is easy.

        • Re:Wanna bet? (Score:5, Insightful)

          by DrSkwid ( 118965 ) on Tuesday March 09, 2004 @08:57PM (#8516204) Homepage Journal
          Software is sadly a hugely complex product.

          No it isn't.

          Windows may be, but software par se isn't.

          The unix way (which Gnome and KDE and probably the kernel (200+syscalls!) are losing sight of) is small components with tightly defined operating parameters.

          Awk hasn't changed much in the 30 years or so it has been around.
          Same for sed, same for grep and a host of "still used every day" tools.

          Badly designed bloatware with featuritis is hugely complexa nd complexity is a vector for failure.

          Well designed software is hugely simple.

          Plan9 (30 syscalls) can stil run *binaries* compiled in 1994.

          • Re:Wanna bet? (Score:3, Insightful)

            by westlake ( 615356 )
            Awk hasn't changed much in the 30 years or so it has been around. Same for sed, same for grep and a host of "still used every day" tools.

            used every day, yes. but not by the users who gave Windows a 97% market share.

      • by k_head ( 754277 ) on Tuesday March 09, 2004 @07:51PM (#8515442)
        You know what's funny though. MS is still spreading that "you can sue anybody if your linux breaks" FUD.

        I guess you can't sue MS either.
    • by MikeMo ( 521697 ) on Tuesday March 09, 2004 @07:17PM (#8515120)
      All of the software companies have similar problems. The big difference is that Microsoft virtually forces you to buy into their program if your company is large at all.

      Because of their monopoly, you have to upgrade eventually. If you don't buy into SA, the individual upgrades later will cost you much, much more. So you end up having to gamble and pick between the two choices.
    • by Anonymous Coward on Tuesday March 09, 2004 @07:27PM (#8515221)
      Im unsure whether you read the article, but the problem is 2-fold.

      Yes, the CTO of Digitech is an absolute fool. He was "expecting" a release, but you don't sign a contract in July, 2002 for something thats going to be released. I assume he wasn't given any guarantee's in writing about the release date.

      That said, the main reason to buy into Software Assurance is to get the upgrades. Hell, the whole thing is marketed towards smaller companies so they can get upgrades when they are released. And if you don't buy into Software Assurance (or the Enterprise Agreement), you don't get things like "Intelligent Message Filter" for Exchange, for example. If you want to get all the upgrades and software, they do tricks like that to force companies into signing Software Assurance (if they want all of MS's products, that is), and the companies are realizing there is no guarantee of any value for the Software Assurance program.

      So in other words, companies might start looking for alternatives, a whole host of contracts are coming up for renewal, and MS are looking at a lower bottom line because of it. Expect some announcements for MS soon that announce new software releases, or "sweeteners" in their licensing agreements.
    • by denissmith ( 31123 ) on Tuesday March 09, 2004 @07:30PM (#8515248)
      It isn't merely a case of Microsoft being a favorite whipping boy. A few years ago when Microsoft announced its move to the new software assurance scheme and people complained loudly that a program where they paid Microsoft a set annual fee for a two year timeframe and MS contracted to maybe release new software and maybe not - those complainers were treating MS as their favorite whipping boy. We are merely saying WE TOLD YOU SO.

      This isn't about slipped delivery schedules, or product quality - its about money.

      The old scheme where people paid for upgrade licenses was abandoned because MS wanted, I believe the phrase was "a more predictable revenue stream" - in other words a MS tax on businesses regardless of the delivery. In short a scam, because that is what it is - I am not bashing MS when i relate that - I am telling the truth.
    • by vsprintf ( 579676 ) on Tuesday March 09, 2004 @09:52PM (#8516646)

      At what point did these customers forget they are dealing with a software company?

      Probably at the point where Microsoft stopped acting like a software company and began acting like the OS of the Month Club. Remember '98, ME, 2K, and XP? Companies were getting hammered by constant upgrade costs. Let's give Microsoft all the credit it's due; it's a great marketing company, and it sold companies insurance against the constant upgrades. Then it stopped doing upgrades. You gotta admit it's brilliant marketing and a boatload of cash for nothing.

      They're just singled out because Microsoft is a favorite whipping boy. Imagine the losses that may be incurred by (more) flawed code being released on schedule.

      I have to admit that I can't make sense of that. I think you're saying that depriving subscribers of promised updates makes the eventual update more secure. What proof do you have of that when Microsoft has claimed every (previous) new release is more secure than the last? Why shouldn't MS do minor level upgrades and give the suck^H^H^H^Hcustomers who bought subscription licenses something for their money?

  • When does an announced or heavily marked release date become "contract like", for example, "Longhorn will be released 1/3/2009" as opposed to using something like "when it is done".
    • Re:When does ... (Score:3, Informative)

      by elviscious ( 681985 )
      Quite simply: When there is a contract.

      As the article said, MS (and nearly all software companies) don't guarentee that software will be released on time.
  • In all fairness... (Score:4, Insightful)

    by Chalybeous ( 728116 ) <chalybeous&yahoo,co,uk> on Tuesday March 09, 2004 @07:08PM (#8515015) Homepage Journal
    ... remember it's not only MS who produce vapourware. Pre-orders for, say, Duke Nukem Forever have gone the same way - although I dare say most retailers offering a pre-order will have issued refunds.
    Sadly, in business, slippage does occur and contracts do expire. It's not preferred, but it occurs more than most people would like.
    The long and short is, IMHO this is only noteworthy at this time because of the sheer scale in terms of both cash value and number of "victims".
    • by MrRTFM ( 740877 ) * on Tuesday March 09, 2004 @07:10PM (#8515037) Journal
      yes, but people aren't paying an annual subscription for Duke Nukem forever - that's the problem.

      We all know that software is late, but we shouldn't have to pay for it if it doesnt arrive.

      • Agreed. I merely mentioned DNF because it was the most recognizable piece of vapourware I could think of.
        Perhaps magazine subscriptions would be a better allegory. I can think of magazines which go monthly, sell a bunch of 12-month subscriptions, then start missing issues or go quarterly at the same cover price. I know if that happens to me, I'd get pretty incensed.
        Then again, I'm not much of a techie. Just a guy pointing out that it's inevitable - shit happens, whether in games or business.

        That said, I
    • by One Louder ( 595430 ) on Tuesday March 09, 2004 @07:13PM (#8515079)
      Which retailer took a preorder for Duke Nukem Forever?

      Anyone who's been paying attention would know that signing up for the Duke Nukem Software Assurance Program was a bad idea.

  • by Jaywalk ( 94910 ) on Tuesday March 09, 2004 @07:09PM (#8515027) Homepage
    Give the manufacturer your money and tell him that he can send you your stuff whenever he's done with it. That's effectively what the "Software Assurance" plan was about. I'm surprised so many of them were sold.

    On the other hand, there's one born every minute. Usually that's plenty.

  • Surprise? (Score:4, Insightful)

    by eddy ( 18759 ) on Tuesday March 09, 2004 @07:10PM (#8515049) Homepage Journal

    I'm pretty sure this exact thing is why almost everyone was against the new licensing when it was announced.

    Can't come as a suprise.

    • For instance: (Score:5, Informative)

      by eddy ( 18759 ) on Tuesday March 09, 2004 @07:21PM (#8515172) Homepage Journal

      Just to show that this couldn't possibly come as a surprise for whoever PHB'es penned these agreements:

      Customers who "upgrade" to the Licensing 6.0 scheme also lose ownership of Microsoft software products and are thereby nudged into limited term licensing with periodic extensions (with or without any code updates), as shall be dictated by Microsoft -- in other words, software leases. -- The Inq []. 16 July 2002


      "According to a report on, a survey of 1000 technology managers around the world showed that the 60% of companies that signed up for the deal have ended up paying more." -- The Inq. []. 21 March 2003.

      So it's not "news" that this scheme would cost you a whole lot with the possibility (and high probability) of giving almost nothing in return.

      If anyone who signing up for Licensing 6.0 actually believed that Microsoft would let them get the next great thing "for free", then I've got one nice bridge to sel^H^H^Hlease them.

    • Re:Surprise? (Score:4, Informative)

      by cgenman ( 325138 ) on Tuesday March 09, 2004 @07:29PM (#8515237) Homepage
      If I remember correctly, the objections to the licensing were primarily about the uselessness of constant upgrades and the subsequent required hardware upgrades to support the new software, not to mention the difficulty of ripping out tested, working systems and replacing them with something that may or may not function correctly.

      I don't remember there even being the possibility that simply nothing would be shipped. Microsoft was, for many years, the king of incremental releases. There were a multitude of releases of Word, for example, that existed merely to break file format compatibility. With dual line releases of NT and 9*, a new version of Windows was always around the corner. The idea that MS failed to ship anything in the time frame is kind of surprising and, honestly, an improvement over previous release policies for those who buy boxed editions.

      Not to call the parent a troll, but there were far more reasons to avoid the new licensing model than the fear that they would release nothing.

  • Remember (Score:3, Informative)

    by reuben04 ( 740293 ) on Tuesday March 09, 2004 @07:10PM (#8515052)
    These contracts guaranteed no upgrades, just that if there was an upgrade in that time frame usually 2 years that you would be entitled to recieve the upgrade. There was no benefit, and we rarely sold them unless we knew that say for instance office xp was due to be released in like 3-6 months.
  • by jeffbruce ( 166203 ) on Tuesday March 09, 2004 @07:12PM (#8515072)
    A lot of Microsoft revenue has always come from very sketchy licensing policies. I don't see why this new twist should surprise anybody. It's just more typical behavior from monopoly.
    • It's just more typical behavior from monopoly.

      It has nothing to do with Microsoft being a monopoly. Most companies try to get customers into some sort of long-term contract, to even out revenue, and to lock those customers into your product.

      This has more to do with Microsoft's customers becoming unhappy, and in a way that may damage Microsoft's bottom line, as the customers think twice before negotiating their next service contract. These service contracts are very important to Microsoft's revenue strea
  • by burgburgburg ( 574866 ) <> on Tuesday March 09, 2004 @07:13PM (#8515077)
    let this thing linger for a few days/weeks, let more and more people vent their (righteous) anger at the utter waste of money that the licensing has proved to be and then, magnanimously, they will offer a renewal option for three years for the price of two with a guaranteed major release or a refund of half the price (or something like that). And all the while, they'll paint themselves as being responsive as opposed to the reality of them being abusive (in the monopolistic sense)
    • by MerlynEmrys67 ( 583469 ) on Tuesday March 09, 2004 @07:43PM (#8515368)
      What I expect Microsoft to do is wait until later this summer when many of the contracts start expiring. When many companies don't bother to renew because "They didn't get anything LAST time" - they wait, then release the upgraded version.

      This of course causes all of the people who fell off of maintenance to have to buy the new version at full retail price, rather than as an upgrade.

      More money for microsofts pocket.

  • by ashitaka ( 27544 ) on Tuesday March 09, 2004 @07:15PM (#8515099) Homepage
    I am one of those IT managers that had a real problem with Microsoft's Licensing 6.0. By essentially forcing IT managers into pre-paying for upgrades every three years that they may or may not use and removing any possibility of customer loyalty upgrades, Microsoft went from fair preservation of their revenue flow to outright extortion.

    Essentially you are being asked to pay a substantial amount of your IT budget for an upgrade sight unseen. Usually before you bring a product into your company you evaluate it for technical soundness and applicability to user needs and business requirements.

    Microsoft seems to assume that their upgrades will always meet these requirements.
    • by overshoot ( 39700 ) on Tuesday March 09, 2004 @07:28PM (#8515235)
      Usually before you bring a product into your company you evaluate it for technical soundness and applicability to user needs and business requirements.

      Microsoft seems to assume that their upgrades will always meet these requirements.

      No, they're quite realistically acting on the observation that eventually you'll adjust your requirements to fit their product. For instance, NT4.0 is going to be replaced because one of those "business requirements" is "continuing support."

      I've watched as W2K replaced NT4.0 and WinXP replaced W2K. At each step, the IT staff reported all sorts of problems with the new version and no material benefits. In reponse, their management ordered them to solve the problems so that the new flavor could be deployed.

      That's real life on the front lines, theory notwithstanding.

    • Microsoft seems to assume that their upgrades will always meet these requirements.

      Microsoft assumes that you'll purchase a site-license OS upgrade sooner or later. Are they wrong? Again, what are you going to say: a) we're deploying Linux! And, going to retrain 10,000 users! And IT! And going to re-develop our crufty, no-source, in-house, business critical apps! b) Go with OS X! As above, but now, we also have to buy 10,000 iMacs! c) Stay on Win2000 forever--as long as you define forever only as long as you offer security support, and the apps that we need will still run on it; which is more like 5 years at the most.

      Basically, Microsoft has you by the balls. The sooner you realize you're their bitch, their money factory, that you (and your company) is really just working for them, the better. Frankly, you're lucky that Microsoft doesn't charge more for their upgrades because, really, they could charge whatever the fuck they wanted, and what are you going to do about it? What are you gonna do when Microsoft releases Longhorn, and, to pay for 5 years of development, they charge $500/user? Your options are listed above. Basically, you can either a) suck it up, and stop crying, and realize that you're working for Microsoft, not the other way around, or b) switch to another platform right now, today, and suck on the costs of migration. Because every day you wait is another day that you'll have worked for Microsoft, and simply put off the inevitable, without coming any closer to avoiding it. When your corner office complains about the cost, you can remind them that they and their ilk are the ones that voted Ashcroft "Slap on the wrist" into office, and this is the thanks that they get.

      Why this comes as a surprise to anyone is beyond me--why do you think use of monopoly power to extend into other markets is illegal in the first place? Do you think it's because some bleeding liberal hippies got a bill passed once, or maybe actually because some dead white economists realized the real, profound, and lasting damage a monopoly could do to our economic system?

      If this sounds like a whiny troll, well, it is. But every non-Windows based IT person saw this coming (all three of them), and it's why the monopoly trial was so important. That Microsoft beat the rap, and got so many to leap to their defense, is going to be rewarded. In spades.
  • Why big releases? (Score:4, Interesting)

    by barcodez ( 580516 ) on Tuesday March 09, 2004 @07:16PM (#8515109)
    Every software developer knows that big releases to production systems is a bad idea. I would much rather have small incremental releases. That way when a release causes a problem only a small area has to be examined.
    Maybe it's different with Microsoft software.
    However I expect people like getting there shrink wrapped dvd new version rather than applying a small downloaded patch.
  • I must say... (Score:5, Interesting)

    by rainer_d ( 115765 ) * on Tuesday March 09, 2004 @07:18PM (#8515132) Homepage
    ..that e.g. SuSE (with their Enterprise Software) offers something similar:
    during the time you have a maintenance contract
    - which is required to actually download
    patches - you can also upgrade to a newer
    version of the product, if it is available.
    So you actually pay for the maintenance and get
    upgrades "free".

    Microsoft should do the same, then people would stop whining. At least for the above reason ;-)

  • by TheKubrix ( 585297 ) on Tuesday March 09, 2004 @07:19PM (#8515147) Homepage
    I am unfortantly responcible for our Microsoft CRM system, which was released a little over a year ago. So waiting for version 1.2 to come was frustrating, and having them push back the release date didn't help. It was finally made official that it would be released in the beginning of December. Dandy.

    So being a good IT slave, I plan the upgrade ritual around my schedule and priorities.

    Long story short, it didn't arrive until mid January. Needless to say I constantly received inquires about when the system would be upgraded, as parts of the system were not working right and MS was still working with me to fix it and they felt that the upgrade would be the solution....

  • by LostCluster ( 625375 ) * on Tuesday March 09, 2004 @07:21PM (#8515164)
    It's impossible to tell in advance what these contracts are going to be worth. In short, these people paid for any updates to Windows in 2004 or 2005 on the assumption that there would be one. Microsoft never promised one, but they hinted that Longhorn should be ready by then, and it's been Microsoft's habit to release a new OS every two or three years.

    Well, sorry, no new release. Nobody promised one, they just assumed like fools that there'd be one. Ton of money wasted. Oops.

    Thing is, how can Microsoft ever sell these subscriptions again to companies that paid and got nothing?
    • Simple (Score:5, Interesting)

      by SmallFurryCreature ( 593017 ) on Tuesday March 09, 2004 @08:03PM (#8515588) Journal

      You are a CTO. You advised to buy the software assurance plan at first.

      Now you have two choices. Recommended renewal and possible have to explain if your ceo is even aware that no the old subscription was perhaps not full value. (can easily be argued that instead you paid for the patches, god knows there been enougn for them. Also easy to show figures it is actually cheaper, MS salesrep can give you those).

      OR you tell that you were wrong before and are responsible for wasting shitloads of money in a down economy for absolutly no return whatsoever.

      Mmmm. Though choice ain't it? MS doesn't have to sell anything. All the people who bought it will sell it for them or be fired.

    • It's impossible to tell in advance what these contracts are going to be worth. In short, these people paid for any updates to Windows in 2004 or 2005 on the assumption that there would be one.

      What is more important is: Will the update worth it?

      I mean who is stopping Microsoft in merely repackaging MS Office with some new icons or even better a new file format?

      I personally think that's worse than no upgrade at all.

  • by El ( 94934 )
    If BYTE Magazine had adopted this "Give us money for a subscription, and we'll send you and issue whenever we manage to get one out!" business model, they would probably still be in business!
  • by syousef ( 465911 ) on Tuesday March 09, 2004 @07:24PM (#8515198) Journal
    The CIO of a company should know better than to get a maintenance contract just so he can upgrade based on a roadmap that may or may not materialize. If you want the maintenance only so you can upgrade, wait until the upgrade is out and THEN sign a maintenance contract.

    The CIO needs to make it clear in summary to the CEO and CFO that these are the expected benefits, these are the assumptions I'm making and these are the risks. In my opinion he didn't do his job and now he's blaming Microsoft for failing to pedict the future, and he's making a fool of himself in the process.

    If you're going to blame Microsoft, blame them for something they've done wrong. Don't try to penalize them for telling you what their plans are (a good practice in my opinion), or for your own stupidity. It makes you look like a whinning twit when you do have a legitimate complaint.
    • If you want the maintenance only so you can upgrade, wait until the upgrade is out and THEN sign a maintenance contract.

      MS Requires you buy Software Assurance within like 30 days from purchase of initial product--in other words, you can't do the above.

  • by Anonymous Coward on Tuesday March 09, 2004 @07:26PM (#8515210)
    many thousands of dollars spent on these contracts have brought them zero return.

    Why, just in the last few months they got Blaster and Bagel and MyDoom and Skynet and...
  • by craXORjack ( 726120 ) on Tuesday March 09, 2004 @07:27PM (#8515218)
    Microsoft recently said it was working on something called XP Reloaded, which appears to be an interim release of the desktop operating system before the big upgrade to Longhorn now slated for 2006. It also lets Microsoft put some software in the pipeline for Software Assurance customers. A similar upgrade is rumored for Office,

    John Conner: Boss, our customers realize they have been ripped off.
    Bill Gate: We've seen this problem before. We'll just release Service Pack 5 as a new OS. It's new if we say it is. Have Marketing design a new splash screen. That will fool all those bumpkins.
    John Conner: <snicker> You're right again Bill!
    Bill Gate: Yes I am, because I am smarter than everyone else.
    John Conner: Then do you think you could help me out? My mother, Sarah, is being chased by a cybernetic killing machine sent from the future...

  • by Helpadingoatemybaby ( 629248 ) on Tuesday March 09, 2004 @07:28PM (#8515226)
    This is just a lease, except that at the end of this lease you have no option to purchase, you surrender all end of contract ownership rights and you lose the tax write off that comes with a lease.

    So, in short, no ownership, no migration path (except if Microsoft feels like it), no lease write offs, and you get to pay rent.

    Do landlords generally improve an apartment after you move in? Not usually. They figure, you're in so why bother. These companies better get used to the leaky toilet.

    At least if you're renting you only have to move apartments. The first time a company wants to discontinue "software assurance" they're going to realize that moving to a new apartment is a whole lot easier than moving every single pc and server to a different OS or to finance purchasing of all software everywhere in the company.

    In short it's a choice that only an MBA could love. (Want to put your company out of business? Create an expense where none existed before!)

    • "This is just a lease, except that at the end of this lease you have no option to purchase, you surrender all end of contract ownership rights and you lose the tax write off that comes with a lease."

      Not true.

      Basically, your initial purchase has to add up to so many points in order to enter Open Licensing. The more points you have on the initial purchase, the better the price you get through the open licensing program for that initial purchase and future purchases. Some products have more points than

  • by BrynM ( 217883 ) * on Tuesday March 09, 2004 @07:28PM (#8515228) Homepage Journal
    The chart lists $1.8 billion in 2003, $1.1 billion for 2004 and $0 for 2005. Why even list 2005? It hasn't happened yet. All this chart does by having 2005 on there is mislead people into thinking that 2005 was fruitless. What a base way to "support" what you say in your article. When I got to that part, I dismissed the article even though I agreee that MS is in for trouble with the upgrade dilema. Bad journalism strikes again.
    • UA is not SA (Score:3, Informative)

      by balamw ( 552275 ) *

      The chart is for the old licensing scheme "Upgrade Advantage", not the current "Software Assurance" scheme. Thus, since UA has been discontinued there can be no revenue from it in 2005. What revenue they got from SA should be a different chart.

  • by Progman3K ( 515744 ) on Tuesday March 09, 2004 @07:30PM (#8515252)
    Sorry, I thought this was Fark for a second.
  • by myowntrueself ( 607117 ) on Tuesday March 09, 2004 @07:32PM (#8515267)
    Contracts are what you use against your customers.

  • by Frag-A-Muffin ( 5490 ) on Tuesday March 09, 2004 @07:34PM (#8515291) Homepage

    However, subscribers to Microsoft's Software Assurance program are discovering that it can have some very real repercussions. According to NetworkWorld, many licencees are discovering that due to slipping release dates, many thousands of dollars spent on these contracts have brought them zero return.

    That's exactly what I thought when I saw the story about XP Reloaded. Even wrote a little tidbit on my website [] about it. This is why I think they're doing an XP Reloaded release. I guess it's going to be too little too late?
  • by Realistic_Dragon ( 655151 ) on Tuesday March 09, 2004 @07:36PM (#8515308) Homepage
    A Windows Enterprice Licensing Scheme Contract or a SCO Linux License Contract?
  • by peacefinder ( 469349 ) <> on Tuesday March 09, 2004 @07:36PM (#8515311) Journal
    I happened to be in charge of IT for two different small companies near the Software Assurance deadline, and made the recommendation to decline the move to SA.

    In both cases, it just did not look worthwhile... I didn't think the Microsoft product cycle was likely to be fast enough to warrant the subscription. (Plus I was annoyed with the enforced change, as were many other folks in the industry... but that wasn't sufficient basis for the decision, alas.)

    But it was a pretty high stakes game. Guessing wrong would cost thouands of dollars in the long run for each company. It's quite a relief to see that I guessed correctly... so far.

    Amusingly, Microsoft has now managed to give pretty much all of its business customers cause to be annoyed with them. The first group was annoyed by the enforced choice between the loss of upgrade value and the expense of Software Assurance. The second group, that chose SA, should be getting pissed off right about... [checks watch]... now.
  • by Gavin Scott ( 15916 ) * on Tuesday March 09, 2004 @07:38PM (#8515330)
    I think the ultimate product for stupid people will be pre-paid health insurance (coming soon to an HR department near you I'm sure).

    Once you've paid for such a plan, it's in the provider's interest for you to die as quickly and efficiently as possible so that they get your money but don't have to provide any services in return.

    The Microsoft pre-paid license program is just one step below this.

    On the other hand, the typical business customer might actually like a way to pay for *not* having software updates, since constantly having to upgrade to the latest version is a pain in the neck, along with having to deal with the feature bloat that is required to otherwise motivate people to upgrade.

    This is the business that RedHat has gotten into where in exchange for money they guarantee that the software you're running today will remain supported for a much longer period and you won't be forced to upgrade before you want to, and it's clearly the direction Microsoft is tring to move as they start running out of compelling feature-based reasons to upgrade from verison N to N+1.

    So if you don't want things to change, by all means pay in advance, but if you're looking forward to new features, wait until the product actually ships before handing over your money.

  • Priceless (Score:5, Funny)

    by Anonymous Coward on Tuesday March 09, 2004 @07:40PM (#8515351)
    MSDN Subscription: $2,000
    Windows XP License Agreement x 200: $12,000
    Office License Agreement x 200: $20,000
    Being Bill Gates and laughing all the way to the bank for having to provide nothing extra: Priceless

    For all your price gouging and junk software there's Microsoft. For everything else, there's Open Source.
  • by Maskirovka ( 255712 ) on Tuesday March 09, 2004 @07:43PM (#8515370)
    Microsoft Customers Get No Bang for Buck

    In the interests of political correctness, the Microsoft's lawyers insisted on using the phrase "anal induced shafting."

    Contract law- it can be a bloody/shitty business.

  • by Desolation Row ( 550944 ) on Tuesday March 09, 2004 @07:45PM (#8515390)
    From two years (2000 through 2001) Microsoft provided essentially nothing in the way of new programming tools (or heaven forbid, bug fixes) to it's $2,000/seat MSDN customers.
    After two years of 90% profit margins ($200 worth of duplicate DVD/CDs + shipping), in 2002, they raised the price by about $1000 for 2002's .NET so their net profit remained $1800/year.

    So, except for the few MSDN customers who were smart/quick enough to figure out what Microsoft was up to, they ended up paying $7000 + $2500/yr for .NET. (To be fair, it comes with a free copy of Office 2003.)
  • And I wish... (Score:4, Insightful)

    by rcastro0 ( 241450 ) on Tuesday March 09, 2004 @07:48PM (#8515428) Homepage
    I wish this caused people to stop paying MS for upgrades ahead of time. So that upgrades would not be a given for a percentage of the user base. So that the remaining percentage of the user base did not feel compelled to upgrade as well, in order to keep file_features compatibility with upgraded base. So that people might have a chance to look at what new comes out and ask themselves: is this even worth upgrading ?

    Then maybe increasingly bloated software does not keep us upgrading and throwing away computers so much. Then OS developers will have a fixed target to catch up. Then MS will no longer be this "bigger-than-life" company. Then developers may dream of contributing to the world, instead of only to a profit making machine's bottomline.

    Patents expire. Good things reach the Public Domain. Combustion engines and electric lamps, penicilin and frozen dinners get produced by lots of companies. Why should companies such as MS, Oracle, Siebel, etc. expect to have a perpetual hold of a specific market through an infinite number of releases ? Why should any institution other than governments charge taxes ?
  • by samjam ( 256347 ) on Tuesday March 09, 2004 @07:52PM (#8515448) Homepage Journal
    "A $368 Office license would carry nearly a $107 fee for Software Assurance. "

    Thats less than $10 per month.

    Considering the number of stupid websites that are aching to charge $5 per month subscriptions, $10 a month regular for real software doesn't seem so bad.

    • Thats less than $10 per month. Per computer...

      If your company has 20 licences, it may not be that bad (around 180$ per month) but at 115 employes, it's around 1000$/month for nothing yet

      Now think about companies like IBM who has countless employes and paid a lot of money... for not much more than the status quo....

      That is what the article is about... That is the real problem...

      Windows may be a worthy OS, but the ROI is getting samller for thoses who took the wrong licencing...
  • by TheCeltic ( 102319 ) on Tuesday March 09, 2004 @07:52PM (#8515451) Homepage
    It appears to me that Windows/Office/etc. are finally becoming "good enough" and people/companies are not seeing the need to upgrade anymore. (I know.. both windows and office are still buggy and closed source, but for most desktop users they are good enough... finally). What does this do to Microsoft's business model of "force your customers to upgrade every x number of years"? I imagine that is why Bill G. wants the world to go to subscription based software (i.e. rent Office per month).
  • by tuxedobob ( 582913 ) <> on Tuesday March 09, 2004 @08:03PM (#8515593)
    Will they follow with XP Revolutions? Will either be as well-received as the original?

    Microsoft C*O of your choice: "Hey, those Matrix movies were cool! Everybody liked all of those! Let's use that for a naming scheme!"
  • by dpbsmith ( 263124 ) on Tuesday March 09, 2004 @08:15PM (#8515765) Homepage
    Digital's OS-8 software for the PDP-8 was sold by... if I recall correctly the term was "software maintenance contract." For something like $500/year you got "every" release, which had always been annual... until the year when there was no release. There were some fairly harsh questions at DECUS that year.

    Of course, it wasn't as bad as the Y1978 bug. OS-8 stored the date in a single 12-bit word, with three bits for the year... epoch 1970. By 1975 or 1976 people were starting to get a little nervous. The PDP-11 was hot by then and the DEC line was that nobody would be using OS-8 by the time the date field ran out. In fact, the product manager said to a roomful of DECUS attendees that he would "personally" fix the date if OS-8 was still in use in 1978. Of course... it was. And, of course... the manager had moved on to other things at Digital and wasn't around to be held accountable. The date field actually did run out. Digital fixed it by shoehorning in a two-bit extension. But the fix was late, sometime after mid-1979 if I recall recorrectly.
  • by digital photo ( 635872 ) on Tuesday March 09, 2004 @08:20PM (#8515820) Homepage Journal

    Let me get this straight:

    People gave up perfectly good static licenses for MS products and switched to a annual subscription fee to keep their licenses renewed regardless of whether a new update arrives or not, just so that they can save some cash per license?


    Why a reasonably intelligent person running a profitable business would choose to give up control of when they upgrade and how much they pay for it is just beyond me.

    Judging from the page's estimates for 2003 and 2004, there appear to be ALOT of people and businesses who seem to think it is a good idea.

    Look, for the past DECADE, MS has routinely slipped on delivering their software. Remember Windows 95? Came out quite a bit later than expected. Same for 98.

    Look, if you HAVE to use MS products, at least use them wisely. Your department has the money to outright buy a license for use. That means you get to keep using what you bought... as opposed to this ridiculous "subscription" service which exchanges your working license into a crippled license that expires. For what? So you can give MS your money with absolutely no expectations from them, right?

    I hope people recorded and/or documented their conversations with the MS reps.

    Seriously, what does using a MS product give you? Why do people persist in using the MS OS when it is constantly being targetted by worms and virii? When the OS itself goes through so many internal changes that no one knows for sure if it is safe to use?

    Understandably, it looked good on the balance sheets. But I think it is high time that the people looking at the balance sheets beef up on technology. Have the CFO spend some time with the CTO and maybe some other Tech people who KNOW the software and the history. THEN make your informed decision.

    Think about it: The time it takes people who use an MS infra-structure to port what they have over to the new MS infra-structure... couldn't that have been used to port it to say... a Unix based one? Really, it can be done. Better uptimes, few if any worms or virii... and depending on what version of the OS you choose, free upgrades and quality support from the online community.

    Hell, if you MUST run some critical app on windows, why not run it inside of a virtual machine? Time to upgrade hardware? Just install the Unix os and then copy over the virtual machine image. Bam... hardware upgraded with only a few minutes of downtime. License keys are happy, software runs in the "same" environment, just faster.

    Business really need to start thinking in terms of what the problem REALLY is as opposed to what their vendor tells them the problem is. Especialyl if that vendor has a nice pricey solution for you.

    A business investment should not be a shell game where the vendor goes: oh, sorry! you didn't get anything this year, why not pay your fees and try again next year?

    That's shows a simple lack of understanding of one's own company's relationship with the vendor. They are a freaking VENDOR. But companies treat MS like it was the parent company or something.


    Okay, enough ranting from me. I mean, it's not my money that got sucked up for no good reason.

    Btw, visited the forbes ROI calculator for the Software Assurance thing. $18,000 for three computers? These are supposed to be workstations, btw. If that is the case, whatever company paying that much for workstations alone is already getting shafted before MS ever got to them.

    Anyways, hadn't posted in a while, so getting this out of my system.

    As for the companies... they really need to look at what it is that they REALLY REALLY need. Make a firm decision and go with it. If they hang onto the SA with MS because they are afraid, then they might as well just hand over the money now and forever. If they decide this was a bad idea and a mistake, then they should have the guts to admit they screwed up and figure out which technology path is right.

    It isn't rocket science. It's business.

    I find it both annoying and terrifying that people who have been to business school fall so easily for what is essentially a pie in the sky subscription system. It's like someone telling you they might not mess with you tomorrow if you pay them now. But they're there tomorrow anyways...

  • by mnmn ( 145599 ) on Tuesday March 09, 2004 @08:41PM (#8516038) Homepage
    We're killing the support contract of our company with IBM, and spending the money on another identical server instead. Shit happens, we swap the new with the broke server, surely much faster than waiting for their next-day service.

    Same with Microsoft. We were paying support for copies of Windows 2000 server, when I realized we've never placed one call to Microsoft. Things go wrong, we format and reinstall Windows; much faster than arguing with a MS technician isnt it?

    So just purchasing duplicated hardware and software gets the job done better and cheaper in most cases, except say for ERP systems in which case a bug will have to be fixed and the system cant be just reinstalled for a fix.

    I know support contracts are different from software subscription licenses but thought I'd mention it here for brevity. Now on that topic, I wouldnt quite understand why anyone would need subscription licenses from Microsoft anyway. Its 2004 and we still insist on running Windows2000SP4 instead of XP or 2003. We'll wait till 2005 and SP3 before considering 2003. IT departments crave stability in their servers, so going cutting edge with Micrsoft is like shooting yourself in the foot. I wouldnt even go cutting edge on Redhat if the server hosts important stuff.

    So ladies and gentlemen of IT, please stop the frenzy of latest, more, bigger, faster, cutting-edge and focus more on better, smarter. We're all in the business of making money.
  • Precisely why... (Score:5, Insightful)

    by prisoner-of-enigma ( 535770 ) on Tuesday March 09, 2004 @09:21PM (#8516386) Homepage
    This is precisely why I advised our COO that we not buy any subscription program when we upgraded to WinXP and Windows Server 2003. Microsoft allowed nearly three years to elapse between Win2k and XP/2K3, and the two year interval for subscription pricing just seemed too short. I gambled that Microsoft wouldn't make a major release in the next two years, and it appears it was a good gamble.

    I had a long talk with one of the enterprise account reps at CDW, and I asked him just how many of his customers had actually bought into subscription. "Less than 15%," he said. Seems I wasn't the only one with this idea. When (if) we do upgrade to Microsoft's latest and greatest, we'll have to pay full price, but that should be less than the cost of two subscription terms. I'm also betting that Linux pricing pressure will force Microsoft's next product offering to be substantially cheaper than their current lineup.
  • by Anonymous Coward on Tuesday March 09, 2004 @10:02PM (#8516728)
    My company bought 75k in SA licenses for Application Center 2000. We contacted our MS rep and after 2 weeks we got it *all* back.

    Kudos to MS for stepping up and doing the right thing. In fact the check we got from them said the $$$ came from the "Make It Right Fund".

    Before you bitch about not getting the software you paid for, ask for your $$$ back. From what our rep said, MS is doing the right thing all over the place to keep people happy - contact your rep today.

    Don't be too quick to judge...
  • by JakiChan ( 141719 ) on Tuesday March 09, 2004 @10:07PM (#8516758)
    I'm not really in the software support realm, I support network equipment. So I'm trying to compare this to Cisco SmartNet(tm) and it makes me ask this question:

    If I have support for a device (let's say it's 7x24xhr onsite replacement, which isn't real cheap) and the device does NOT fail then have I paid something for nothing? I've still had access to the TAC all this time and all the other things that come with support.

    Now I know software doesn't physically break in such a way that you need a new identical replacement from the vendor, but to me this seems similar. It was possible that Microsoft was going to come out with an upgrade during this time, so you buy the contract. You also get (according to the article) access to support services.

    On the one hand I know that most folks bought this for upgrade protection, but on the other hand it seems to me that support is insurance, not a gamble that you'll get something out of it. If I'm wrong please correct me.

  • by rice_burners_suck ( 243660 ) on Tuesday March 09, 2004 @10:46PM (#8517026)
    Zero return. Kind of like zero payments and zero percent interest on purchases, cash advances, and balance transfers through 3010. Uh, from Microsoft's point of view, that is.

    I wonder if there is any correlation between Zero Return on Investment (ZROI), an innovative new marketing strategy by Microsoft, and the undisputed fact (according to Microsoft advertisements) that said ZROI is, in fact, less expensive, in terms of Total Cost of Ownership (er, Licenseship), than sofware from that competing multinational multiconglomerate semi-government quasi-empire organization that makes that GNU:\>Linux thing, or whatever it's called.

    On the other hand, there probably isn't any correlation. It's just a coincidence that Microsoft is so incredibly innovative.

  • by Awptimus Prime ( 695459 ) on Tuesday March 09, 2004 @10:52PM (#8517074)
    My great grandmother, who is definitely not the origin of this passage, used to say "If you dance with the Devil, you are going to get burned."
  • by buss_error ( 142273 ) on Wednesday March 10, 2004 @03:08AM (#8518700) Homepage Journal
    Microsoft's move here was very valuable. Imagine all the bugs and broken software avoided simply by not releasing any software. Fantastic! No problems from upgrading! When was the last time you did a MS upgrade and had ZERO problems?!
  • by 4of12 ( 97621 ) on Wednesday March 10, 2004 @09:50AM (#8520370) Homepage Journal

    Some people I know who hate learning curves (and I'm one of them) will run the same piece of software for years and years.

    They beat it to pieces and wring every last penny of value out of the thing because it doesn't wear out for them. The more they use it, the lower their per-use cost becomes. Small businesses are running everyday applications on DOS.

    If your software is "good enough" and can be run forever, then why would you spend good money to buy something different? Is it really necessary and going to provide increased ROI?

Recent investments will yield a slight profit.