December 27, 2000, 2:26 PM — In a move seen as an attempt to steer corporate users away from Windows 95/98 and Windows Me, Microsoft Corp. said it plans to phase out volume discounts on those versions of its operating system by the middle of
next year -- leaving Windows 2000 as the only choice for companies looking to get discounts.
Volume licensing for Windows Me, the latest release of what Microsoft describes as the consumer-oriented version of Windows, is scheduled to end as of March 1.
Volume-based discounts will disappear at the end of June for Windows 95 and 98, according to Microsoft officials. And discounted upgrades will be curtailed next December.
Despite the purported consumer focus of the three operating systems, Microsoft watchers said the licensing change could have a big impact on corporate customers. "It seems like a less than subtle way to push [users] toward Windows 2000," said Dwight Davis, an analyst at Summit Strategies Inc. in Boston. "Microsoft clearly walked into this knowing they're going to get flack from a lot of people."
Simon Hughes, a program manager for volume licensing at Microsoft, said the change was based on internal research showing that enterprise users are adopting the Windows 2000 Professional operating system at a brisk clip, with a corresponding decrease in corporate purchases of Windows 95 and 98.
"The overwhelming majority of volume-licensing customers have been purchasing Windows 2000 Professional since its launch in February," Hughes said. In contrast, he added, there have been "hardly any" volume-based purchases of Windows Me, which was released in September.
Users who have "specific business needs" and still want to buy volume licenses of Windows 95 and Windows 98 can prepurchase them before the June deadline and deploy the software afterward, Hughes said. Alternatively, he said, companies can secure "downgrade rights" by licensing Windows 2000 Professional and then decide at a later date to deploy Windows 95 or 98.
The licensing announcement came one day after Microsoft warned that financial results for its second fiscal quarter ending this month will likely be below expectations. But John Connors, the vendor's chief financial officer, said Windows 2000 sales are on track with earlier projections.
Microsoft has made efforts over the last two years to simplify its volume-licensing policies and has tried to better explain those policies to users, Davis said. But the company's pricing structure is still "convoluted," he added.