License To Change

The executives confirmed that Microsoft is studying a mechanism that automates the way companies add incremental users to its licenses on a "pay"as"you-go" basis and is considering a new client access license (CAL) strategy that would ease licensing for all customers. (See related story.)

The current core CAL includes client licenses for Exchange Server, SharePoint Portal Server and Systems Management Server (SMS). Asked whether Microsoft would add other server licenses to the core CAL, executives said the company is trying to be more flexible and is studying many options. As previously reported by CRN, the company has approached enterprise partners to weigh a number of new strategies.

Bob Muglia, senior vice president, Windows Server Division, said Microsoft "might do a CAL that includes a few more things. But in enterprise markets for EA [Enterprise Agreements], we're looking at how to do things on a more componentized basis."

Muglia and other Microsoft executives stressed that no such plans are set yet, but they are looking at changes across customer segments. The game plan seems to focus on adding more value to existing licenses rather than cutting prices.

Microsoft has taken heat over its latest EA licenses and Software Assurance (SA) plans. Many viewed the new EA volume licenses as de facto price hikes and felt the three-year-long SAs to cover upgrades were no longer cost-effective because of Microsoft's slowed product cycle.

Microsoft is likewise working on ways to ease licensing for partners that outsource IT capabilities for customers. Typically, in such situations, the customer licenses the software from Microsoft directly and then turns implementation over to the outsourcing partner.

Partners that outsource IT services want to license software from Microsoft on behalf of their customers and aggregate licensing for multiple customers in their data center"similar to service providers' licensing. Microsoft has authorized only select outsourcers to do this in the past.

"Any [systems integrator] can get an SPLA [Service Provider License Agreement], but terms and conditions aren't always there. [They want] more flexibility in the SPLA," said Jarred Wheeler, general manager of Enterprise Services and Technology Partners.

Small and midsize businesses also have issues that require license changes, Microsoft executives said. The company is also considering bundling to get more server applications in use but doesn't want to reincarnate BackOffice.

"The licensing conversations are tailored to each enterprise, but it's different in the medium-business space," Muglia said. "We have 22 servers in the marketplace. We're talking about [bundling] opportunities but I don't think I can build a Small Business Server [suite] for medium-sized businesses. "But there must be something between one and 22," Muglia said regarding deploying more server CALs. Microsoft might have a better idea on specifics "this fall," he said.

Orlando Ayala, senior vice president of Small and Midmarket Solutions and Partner Group, said that giving customers more flexibility and guidance is a top priority for Microsoft.

"We can rationalize our approach around selling with the right type of license to the right type of customer," Ayala said, noting that Microsoft will work to establish specific licenses for each customer segment. "We haven't been as proactive [with customers] about which license to buy."