Windows 7 Enterprise Asks Too Much
link: original article - section: windows
Microsoft is like an old dog that even when beaten won't stop peeing on the rug.
Microsoft doesn't learn about some things. Windows and Software Assurance is one of them.
According to a "Windows for Your Business" blog post, Windows 7 Enterprise carries Software Assurance requirements, just like Vista. Microsoft blogger Gavriella Schuster writes:
Windows 7 Enterprise is part of the Windows Optimized Desktop offering, which also includes the Microsoft Desktop Optimization Pack (MDOP) tools and will only be available to customers with Microsoft Software Assurance on their Windows client licenses.
This is information I should have caught when Microsoft made its Windows 7 versions announcement last week. According to the Windows 7 Enterprise Web site: "Like Windows Vista Enterprise, Windows 7 Enterprise is only available to customers through Microsoft Software Assurance licensing."
The licensing policy is disappointing and short-sighted. Microsoft isn't going to get what it wants. Windows isn't Office.
Some background: Annuity licensing contracts have done well for Office and Microsoft server software. The contracts smooth out Microsoft revenue. Rather than steep hills and deep valleys of revenue aligned with release cycles, Microsoft collects fees upfront and amortizes them over two or three years. The money appears on Microsoft's books as unearned revenue.
Microsoft introduced the Enterprise SKU with Windows Vista, which carried a Software Assurance requirement. The company packed exclusive features that enterprises would want but couldn't get without first signing up for Software Assurance.
When I first blogged about the requirement, in July 2007, businesses were looking at heftier upfront deployment fees. Some customers were angry at Microsoft. But something surprising happened. The power of monopoly failed to move enterprises forward. According to numerous analyst reports, only 10 percent of businesses had migrated to Windows Vista by the end of 2008.
Enterprises didn't upgrade for many reasons, but I'd bet money that the Software Assurance requirement is one of the main ones. Why should businesses already reluctant to migrate from Windows XP to Vista pay even more to do so, because of Software Assurance?
Something else: At the end of June 2007, Microsoft claimed that Windows annuity contract penetration was about 19 percent. As of Dec. 31, 2008, that number hadn't really changed. OEM sales accounted for 81 percent of Windows revenue. Annuity licenses account for most of the remaining 19 percent. By that measure, Microsoft's Windows Vista Enterprise Software Assurance experiment has failed.
Isn't it time to stop peeing on the rug?
But Microsoft can't easily let go. The allure of all that steady, unearned revenue is too strong. Microsoft doesn't want 80 percent of customers buying Windows through OEMs. The company wants numbers at least like Office—around 45 percent of revenue tied to annuity contracts. Problem: The market isn't buying into it, and there's even less incentive now.
