October 08, 2009, 8:40 PM — Navigating Microsoft's complex rules and programs for software licensing has been notoriously difficult for businesses -- a pain point not lost on the company, which for years has said it is trying to simplify the process for customers.
But remarks made recently by Microsoft's top executive, as well as suspicions raised by customers and software consultants, suggest that Microsoft keeps its licensing complicated for a reason, and that it has no plans to make it any simpler in the foreseeable future.
CEO Steve Ballmer was asked earlier this week at an event in London when Microsoft will simplify its licensing, according to several reports. His response: not anytime soon. "I don't anticipate a big round of simplifying our licenses," Ballmer was quoted as saying. "Every time you simplify something, you get rid of something."
While he acknowledged licensing is complicated, Ballmer said those complications sometimes allow customers to use the fine print to save themselves money. Simplifying the process, he reasoned, would cost them that advantage.
In a recent interview, Microsoft Business Division President Stephen Elop also defended Microsoft's licensing. He acknowledged that it can be difficult to contend with, but said customers find it worth the time and money they invest because it brings them products that help them to innovate and lower their costs.
Customers tend to take a big-picture view of licensing, according to Elop -- that is, they look at the value it adds to their businesses overall, rather than dwell on the minutia of individual licenses required for the products they use.
"Customers want the amount they pay to be tied to the value that they’re driving, the usage they’re getting -- that’s why these models are so complicated," he said. "For different customers, these things are measured in different ways.
"What a customer will do generally is take a big step back and say, what am I paying for e-mail? What am I paying for collaboration? And they will make a determination as to whether they think that’s fair value or less than fair value," he said.
Nevertheless, customers grouse that Microsoft's licensing terms -- particularly a requirement that they buy client access licenses (CALs) for each employee who uses Microsoft's business software -- are harder than they need to be. Some are resigned to their fate, as they don't foresee any long-term resolution to what has been a constant problem.
"I would never say that it's easy," said a senior manager at a Silicon Valley gaming company that uses Microsoft's products. While his company is generally happy with the products it uses, he said, "it's always challenging" to ensure his company stays compliant with Microsoft's licensing agreements -- especially when it comes to CALs.
In fact, the changes Microsoft has made to simplify its licensing over the past several years have only made it more complicated, according to the manager, who asked not to be identified because he is not authorized to speak publicly for his company.
"It seems like every two or three years, Microsoft changes the way they do things," he said. "I know they're trying to make it simpler -- I know that's what they say -- but the fact that it's changing does not make it simpler. Each time we go through [a change] we have to learn again how it's done."
For sure, licensing software from large vendors has never been a walk in the park for business customers, for various reasons.
Scott Rosenberg, CEO of Woodbridge, New Jersey-based Miro Consulting, which helps companies analyze licensing agreements with Oracle and Microsoft, said it's not really in the interest of large vendors to make licensing easy for customers, who they know have limited options to go elsewhere for products.
"Once you're on Microsoft, you're on Microsoft -- where else are you going to go?" he said. "In a sense, they have you where they want you."
This locked-in feeling is what many customers think gives vendors like Microsoft and Oracle an unfair advantage over them, and it's the reason vendors are not inclined to make licensing any easier, Rosenberg said.
Still, Microsoft's licensing is unique in requiring companies to purchase CALs in addition to whatever per-CPU pricing they pay for a piece of software, he said. This has been one of the biggest areas of contention for customers for years when it comes to Microsoft's licensing.
Microsoft sells access licenses to its software and services in different ways. Sometimes the price is built into the cost of a hosted service -- something that's called a subscription access license (SAL) -- and sometimes CALs are sold in packages.
