June 09, 2008, 2:26 PM — IBM didn't become a US$100 billion-a-year business by playing the discount
game.
So it's indicative of the company's eagerness to loosen Microsoft Office's
grip on enterprises that it has unveiled support pricing for its Symphony office
suite that analysts say makes an attractive case financially for switching software.
IBM said last week that it will provide unlimited remote support for up to
20,000 Symphony users for a flat fee of $25,000 per year.
Consumers and businesses can still run Symphony, a heavily modified version
of the open-source OpenOffice.org software IBM announced last fall, for free.
Buying IBM Elite Support gives customers access to 24/7 support with a guaranteed
response in two hours, albeit only via phone, instant message or e-mail.
IBM Elite Support would cost as little as $1.25 per user per year if a customer
had exactly 20,000 users. But companies can only buy it in increments of $25,000,
meaning the cost for 20,001 Symphony users would be $50,000, not $25,001.25.
"For the enterprise customers [IBM's] focusing on, it's very cheap,"
Melissa Webster, an analyst at IDC, said in an e-mail. "Even $25 per user
per year for a 1,000-person company is pretty cheap."
Moreover, Symphony support is free for the more than 100 million existing users
of its sibling Lotus Notes corporate e-mail client software. Support subscribers
must take part in IBM's Passport Advantage volume-licensing program, which Webster
said is also free.
How does that compare to Microsoft Office? According to Paul DeGroot, an analyst
at Directions on Microsoft, the cost of licensing Office 2007 via an Enterprise
Agreement (EA) with Microsoft is $155 per year, or $3.1 million for 20,000 users
(though there are discounts for those buying other desktop-related software
from Microsoft).
That EA would include a subscription to Microsoft's maintenance and support
program, Software Assurance. According to DeGroot, "companies do get some
support incidents with SA, but it's pretty trivial, like one support incident
for every $200,000 in SA expense. Microsoft isn't nearly as liberal with SA
support incidents on desktop software as it is for servers (even though customers
pay more for SA on desktop software)."
As a result, many companies still need their own help desks to aid users with
desktop issues, including problems Office, which incurs additional costs, said
DeGroot.
(For a detailed fiscal analysis from an IBM point of view, see the Symphony
blog.)
IBM's support for Symphony also compares favorably with the cost of Sun Microsystems
Inc.'s support for OpenOffice.org and its proprietary $70 sibling, StarOffice.
For 20,000 users, Sun charges $9 per user annually for standard support for
OpenOffice.org, and $11 per user annually for premium support, according to
a spokeswoman, who did not disclose how much that per-user price varies for
different numbers of users.
Even at 20,000 users, Sun's price still works out to be between seven and nine
times higher than IBM's. However, "given that Sun created OpenOffice.org
and is still the major contributor of OpenOffice.org, customers who purchase
support from Sun have some unique benefits -- namely getting direct access to
OpenOffice.org engineers, which means faster response time and easier path to
get feature requests into OpenOffice.org," the spokeswoman wrote in an
e-mail. "This is IBM reacting to Sun since Sun is the innovator in the
market."
She said Sun has "several" companies subscribing to its OpenOffice.org
support but declined to elaborate.
IBM claims that about a million people were already beta-testing Symphony before
last week's launch.
With the U.S. economy in trouble, why wouldn't a big company concerned about
costs jump to Symphony right away? For one, there is the cost and time of migrating
users off Office, both in terms of retraining them and physically deploying
the software, DeGroot said. That is a potentially huge expense, considering
that most experts see the migration to Office 2007 from earlier versions of
Office as a long, expensive move.
There are technical reasons, too. For instance, Symphony is unlikely to be
as good a front end for Microsoft's popular SharePoint Server collaboration
software as Office is.
Symphony is also based on OpenOffice.org 1.1 source code, which was released
in the fall of 2003. OpenOffice.org 3.0 is in beta now, with a final release
expected this fall.
