Clock is ticking for Microsoft licence deadline

Hundreds of thousands of corporate Microsoft users have until midnight tonight to sign up to the software giant's controversial new licensing scheme.

The scheme, known as Licensing 6, locks customers into three-year licensing cycles and provides something called Software Assurance (SA), which gives customers discounts on upgrades.

Under the terms of SA, customers are required to pay 29 per cent of the full price of the licence every year. That entitles them to upgrades to new software releases during the licence period. At the moment, users simply pay the full licence cost as and when they wish to upgrade.

By removing this popular 'pay-as-you go' option, Microsoft is raising volume licensing fees from 33 per cent to 107 per cent, according to research company Gartner Group.

But despite tonight's deadline, users are not rushing to sign up to the new terms. Surveys from Giga Information Group and US-based Sunbelt Software, a specialist Windows consultancy, claim that in the US the majority of customers are reluctant to sign up to the deal.

But resistance, said Ian Bramley, managing director at consultants Software Strategies, is futile.

"There is no doubt that these changes have caused an awful lot of anger and unhappiness. Microsoft has not learnt that corporates don't like that fast pace of upgrade and while some of the bigger organisations can bargain tougher deals, many smaller ones can't. So, Microsoft will get away with this as there aren't a lot of alternatives."

Sun Microsystem's StarOffice and Linux could become more popular as governments and educational institutions look at cheaper options, Bramley said, but Microsoft is still the dominant player, with over 80 per cent of the desktop market.

But Mark Harrison, EMEA IT manager at Commerce One, praised the scheme as a way to reduce software piracy.

"We fundamentally believe you should be on the right side of the law and it is far too easy to copy Microsoft software. If anything, it is good that Microsoft has taken steps to reduce this."

Dave Simpson, sales and marketing director at reseller Softcat, agreed. "There is also a lot of unintentional piracy with companies running their business on copies of software that perhaps has not been licensed within certain parts of the organisation. It has given a lot of companies the opportunity to clean up their houses."

He claimed that initially the news of the license changes was badly received. "There was a lot of indignation from customers who felt like they were being forced into something. Many said they would look at Linux as an alternative but not one of those customers has ordered a copy - instead they've sorted out their Microsoft licence."

Simpson claimed his sales team yesterday did more Microsoft business in five hours than it does in a month, as many customers left it until the last minute.

"After all, they would rather the money was in their own bank accounts than in Microsoft's," he added.