Analyst: Microsoft licensing still difficult

With October a day or two away, and the launch of Windows 7 nears, Microsoft’s licensing hasn’t gotten any clearer. Two analysts at Directions on Microsoft, an analyst firm that reports on the company, has released a report that breaks down five reasons why Microsoft licensing is supposedly difficult:

    1.    Many products and markets.

    Microsoft offers a broader set of products than any other software vendor, sells in virtually every country, and deals with customers of all sizes. A one-size-fits-all product packaging, licensing, and pricing approach couldn’t possibly work; complexity is simply unavoidable.

    2.    Decentralized decision making.
    Although Microsoft has a central licensing division that, among other things, designs and administers licensing programs such as Open and Select, numerous Microsoft product groups decide independently what types of licenses are required for a product and how they are priced. Each product group cares most about responding to its competitors, maximizing its revenues, and addressing specific customer requests. Consistency, simplicity, and ease of compliance often take a back seat.
    3.    New technologies.
    Developments such as the Internet, multicore processors, virtualization, mobile devices, and cloud computing have all forced Microsoft to adjust licensing rules. Each adjustment triggers many transition complications for existing customers and may introduce obscure new rules or exceptions designed to generate new revenue from emerging trends.
    4.    Limited enforcement and compliance tools.
    Most Microsoft products do not include features to help medium and large organizations match product use to license purchases or comply with license usage rules. Customers are responsible for building the complex infrastructure and processes necessary to police themselves. Weak enforcement tools can lead customers to buy more licenses than they need or sign up for “all-you-can-eat” license programs, such as Enterprise Agreements.
    5.    Lack of incentive.
    Microsoft executives don’t see current licensing policies as a problem-customers are still buying-and the executives are reluctant to tinker with such a complex system. Any major restructuring of licensing policies could raise a tsunami of transition issues with great risk of costly, unanticipated, or unintended consequences for both customers and Microsoft. Furthermore, Microsoft would likely face at least a short-term hit to revenues to mitigate transition costs for customers.

The analysts make some good points, but they all seem like reasonable changes that Microsoft should move on – and sooner rather than later. New technology shouldn’t be an excuse for a technology company not to change, especially considering that they are partly responsible for this new technology!

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