Microsoft Licensing: Downgrades Dominate the Landscape

I've been serving and drinking a specific flavor of kool-aid when it comes to Microsoft Licensing.

As a Certified Partner and a Small Business Specialist, I have been pummelled with a very clear message for many years: Sell Open Licenses

It might be Open Business, Open Value, OV Subscription. But at every turn it was license, license, license.

The reasons are many, but the truth is that 90% of the reasons are useless arguments that no one outside the Microsoft marketing department cares about. Like the free training from Microsoft. That turns out to be no better than what you get for free on the Office site.

The benefits of open license in my business are clear and obvious:

1) Open licenses are machine-independent. So, if a machine is broken, lost, stolen, or under six feet of water, the owner can take that license and throw it onto another machine.

This is particularly handy because Office is so overpriced. Clients don't want to re-buy that if they don't have to.

2) Some Open licenses have always come with downgrade rights. So, I can sell Server 2008 and install Server 2003. This is rare for us, but we've used it more and more frequently with Office and Windows (Vista / XP). It USED TO BE that you could downgrade just one version. That's changed.


The pitch used to be:

- Full Packaged Product bad (too expensive, no downgrade rights, dies with machine)

- OEM bad (no downgrade rights, dies with machine)

- License good (moderately expensive, includes downgrade rights, machine independent)

(Separate from this is the discussion about when SA and OV make sense.)


Our company has always recommended that clients use the latest version of [whatever] unless there's a valid business reason not to. Valid business reasons do NOT include "I don't want to" or "I'm used to the way software looked in the 90's."

Valid reasons include incompatibility with old programs, poorly-written line of business applications, and mission critical but old hardware.

We have also served up a flavor of kool-aid that says you can skip a generation if necessary. One generation. Not two. Not five.

But Microsoft has gradually changed the kool-aid. I think they've added aspartame to make it sweeter, but give me a headache!

Two changes have gradually taken place over the last few years. First, Microsoft has totally thrown up their hands and stopped trying to get people to buy Vista. You want XP, you get XP. You want its life extended again and again and again? You got it. You want it included in the next version of Windows? You got it?

Second, Office has gradually included more and more downgrade rights.

In the latest Microsoft Product List Document (MicrosoftProductList(Worldwide)(English)(June2009)CR[1].doc - 129 pages) you will find lots of changes that have worked their way into the system in the last year.

Attaching Software Assurance to OEM products has been supported and encouraged for some time. Software Assurance brings downgrade rights. Sometimes those rights are for one version. Now some products allow downgrades to ANY version. For example,

"Volume license customers who acquire a license for Office Professional Plus 2007 may use any prior version of the product in place of the software licensed."

Any prior version.

That means your client can keep that Access 97 database going strong for the next twelve years. They just need to make sure they have the media and someone who is willing to dig into the old VB code.

Note that Microsoft won't necessarily support what you install. If their timetable says it's out of support, then it's out.


So We're Changing Our Tune

If the clients want to run old, outdated, insecure software . . . And Microsoft has given up and made it easy for them . . . then why should we continue to force people into the 21st Century?

"Luckily for me, I have an old Word 6.0 disc. So I can install that all day and all night. It just works. And who needs the confusion of graphical user interface when text is so clear? And it's FAST, too! You can't believe how fast it is."

We're going to try to encourage the latest version of software. But we're done pushing it.

The result for Microsoft is going to be a dramatic reduction in revenue from these clients. If they can buy a product OEM and convert it to SA for less than the cost of a license, then that makes sense financially. If the license is open business and not open value, then the client has a perpetual license. They never have to buy that product again -- and they can keep moving it to a new machine as long as they live.

I know Microsoft will say that that SA expires in two years. But this particular client doesn't need upgrade rights or training. They've downgraded to Office 2000! What do they care about upgrades?

When they buy a new machine, they move the license.

Only when they add a user do they need to buy OEM, add SA, and enjoy another perpetual license.

I'll make a little less money. But Microsoft will make a lot less.

Note on using Software Assurance to convert OEM to Licensed product: you still need a 5-point minimum or you need to add it to an existing agreement. But if you sold the SBS server at a license deal (or converted OEM), then you're good to go.


Links

Here's the latest Downgrade Right Chart for Applications, desktops, and servers:

http://download.microsoft.com/download/6/8/9/68964284-864d-4a6d-aed9-f2c1f8f23e14/Downgrade_Rights.docx (link subject to change).

Note: If you try to google this, you'll get a lot of hits for the January 2007 version of this document. You want the November 2008 (or newer) version.

You'll also find this document linked from http://www.microsoft.com/licensing/about-licensing/volume-licensing-briefs.aspx (and the contents here are subject to change).

This page is also great for information on virtualization, terminal servers, etc.

Finally, the best document out there was just released in June 2009! It's called The Microsoft Volume Licensing Product List. I found it here:
http://www.microsoftvolumelicensing.com/userights/DocumentSearch.aspx?Mode=3&DocumentTypeId=3 but that link is subject to change. The actual document title to search for is

MicrosoftProductList(Worldwide)(English)(June2009)CR[1].doc

(BTW: I added the correct search result for this doc to the Google "Add a Result" feature. Awesome. You owe me a beer.)

(This search currently returns no results in Bing.)


:-)

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