Friday, July 18, 2008

OVS Priced to Kick Butt Right Now

As I've mentioned before, Software Assurance is often a ripoff.
Or, as Susan Says, sometimes it doesn't make sense.

But what can you do when a product is about to be revved?

It is at least a bad practice, and perhaps incompetent or immoral to sell an OEM version of SBS 2003 right now without some kind of software assurance. The same is true of an open license without SA. After all, we know the juicy new bits are in RC1 and the real thing will ship on Nov. 12.

You are unlikely to put in a new SBS install now and then do a whole major migration to SBS 2008 in four months. But 2008 will outlive any server you sell today. So it makes sense to make sure the client has the product available as cheaply as possible.

The new product will include a serious increase in price.

Beginning November 12th, we recommend you do not sell SBS with SA because your client will never benefit from it. You can start selling SA again when you're pretty sure a new version is less than a year away.

But until then, we think it's a must!

- - - - -

But what about plain vanilla SA (two years worth of upgrades) vs. Open Value Subscription (annual payments and three years worth of upgrades)?

Let's look at pricing differences.

Theoretical client has 25 users.

Open Business with SA
SBS Premium (w/5 CALs)
Costs client about $1500.

20 user CALs for SBS Prem with SA
Costs client about $2800

Total $4,300

- - - - -

Open Value Subscription
SBS Premium (w/5 CALS) - one year
Costs client about $525

20 user CALs for SBS Prem - one year
Costs client about $630

Sub total = $1,155
X 3 years
Total = $3,465

- - - - -


That's "more or less" $1,000 savings with Open Value Subscription.

It demonstrates, on one hand, that the pricing for software is absolutely arbitrary and unrelated to reality.

It demonstrates, on the other hand, that you should be quoting OVS on every job between now and November 11th.


  1. Karl,

    There is another very critical step that needs to looked at in this comparison:

    Open Value you own the licenses at the end of the three year agreement term and can renew on SA going forward.

    Open Value Subscription you lease the licenses. The licenses do no belong to the subscriber at any point during the agreement. Price out the purchase of the licenses at the end of the three subscription agreement and it no longer becomes such a "value".

    Perhaps for clients that fluctuate in employee numbers or need to watch absolutely every penny the subscription makes sense. But for most, once the comparison is drawn about ownership, they tend to choose an Open Value Agreement over the Subscription.


  2. Hey, Philip!
    I see your point.

    BTW, I enjoy Your Blog. And we're going to download the Vista Sidebar tool for Hyper-V.


  3. You also have to consider the fact that OVS is company-wide and gives only a small credit for licenses the customer already owns. For more on OVS, see

  4. Hi Karl, great post..Open Value and OVS should be the only way we sell licenses. Microsoft needs to get rid of Open Business in my humble opinion. It has no value at all.

    I believe that SA is a must in today's world. Not only do you get the upgrade protection, you also get network use rights, home use rights and also training vouchers. Huge value to the end client. I like the network use rights myself, because more and more clients want access via Terminal Services or Citrix from outside the office.

    Plus in today's world of high expenses for travel and office space, users can share an office downtown for example and also use the software at home. It makes perfect sense in today's world.

    Thanks for the great posting, missed you at WPC.

    Stuart Crawford
    Calgary, AB

  5. Philip and David: I see your point.

    If a user ends up paying five years at these prices, it will be far more expensive in the long run.

    And what happens if there is no SBS after version 2008?

    What would you get for your money?

    I am fundamentally in favor of a subscription model for operating system (and most application) software. I think that's the future.

    But the pricing needs to be tweaked a bit.

  6. The OVS buy out at the end of 3 years still makes it worth while. This is path that many of our clients are now on.

    But you really missed the boat. Buy purchasing prior to June 27 your clients would have been eligible for rebates that would have made the purchase nearly free. The Big Easy was the most amazing software give-away ever engineering by marketing.


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