Survey Slams Microsoft Software Assurance Program

Microsoft has been aggressively pushing Software Assurance, a contractual upgrade rights program that allows businesses free upgrades -- and other benefits -- in exchange for annual fees over a two- or three-year timeline.

But there appears to be some disconnect between how Microsoft wants to sell its software and how businesses want to buy, an analyst said on Monday.

Three quarters of the small- and medium-sized businesses that the the analyst's report surveyed, don't participate in any Microsoft licensing plan, a strong indicator that buyers and the Redmond, Wash.-based seller don't see eye to eye, said Joe Wilcox, an analyst with Jupiter Research's Microsoft Monitor and the author of a recently-released report on Microsoft's Software Assurance program.

"SMBs prefer to buy software off the shelf or when their budget allows," said Wilcox. "They want to buy it when they want it, and pay for it at the same time."

Enterprises aren't jumping at Software Assurance, either. After eliminating the overlap between Software Assurance and Upgrade Advantage -- an earlier program from Microsoft similar to SA -- Wilcox found only 16 percent of corporate customers subscribe to either.

The root cause may be a lack of value customers may perceive in SA. By Wilcox's count, 53 percent of enterprises and 40 percent of SMBs said that they spent more subscribing to Software Assurance than they did on Microsoft software previously.

Wilcox's take is just the latest by analysts who have portrayed Software Assurance as a problem-plagued program. Earlier this year, for instance, Gartner estimated that by the end of 2005, about half of Select and Open licensing customers, and 30 percent of Enterprise Agreement customers, won't renew their agreements.

Microsoft's Sunny Charlebois, product manager for worldwide licensing and pricing, however, countered Wilcox's claims that Software Assurance is struggling. "We're definitely in line with expectations," she said about renewals, declining to cite specific numbers.

Software Assurance is about more than just upgrades, she said, citing the training, technical support, and at-home rights features Microsoft added to the program in September 2003. "But we do struggle to get those benefits across to the customer," she said.

In its take on Software Assurance, however, Gartner cited a lack of upgrades during the life of SA agreements as a reason why customers shy away. And that's been reflected in the last three quarterly statements issued by Microsoft, which have posted declines in its unearned revenue account, where money from unfulfilled multiyear contracts, such as Software Assurance, is booked.

Microsoft's newly-published server roadmap, which it presented to analysts on Friday, plays to that same disconnect. By the roadmap, Microsoft plans to roll out new server software every four years, with major updates every two.

In that roadmap, Wilcox spots evidence that Microsoft will continue its modular approach to Windows Server 2003 by adding new features in increments. "That modular approach is Microsoft's attempt to fundamentally change how customers view software acquisitions. Its goal is get away from the idea of [software] as a product that you buy, and more into a service relationship.

"It's no coincidence that the roadmap shows Microsoft planning to deliver something every year," he added, as a way to boost the appeal of its licensing programs. "Clearly, Microsoft's licensing plans aren't divorced from how it's developing software."

Those most likely to see a benefit from the server roadmap, he went on, are those businesses buying software like Microsoft wants to sell it: via maintenance plans such as Software Assurance.

But to Microsoft's credit, the roadmap -- which lays out release dates for Windows Server through 2008 -- now provides information to customers who are planning future server migrations.

"What with the large numbers of businesses still using older server software -- particularly Windows NT -- it's good that Microsoft is at last giving out a migration plan," said Wilcox.

This story courtesy of TechWeb .