Microsoft "encourages" upgrades with new urgency

Last week, an article at highlighted what many corporate types saw as Microsoft's attempts to "convince" (and I mean that in the Tony Soprano sense of the word) companies to upgrade their Windows and Office software. One of the tactics mentioned in the article was what many saw as an ultimatum: Upgrade by October 1 or pay 33 to 107 percent more. After October 1, there apparently won't be any more upgrades for Office, so even if you bought Office 2000 six months ago, as of October 1 you have to buy the full version of Office XP at full price.

Even more disturbing are stories like this:

Other companies subscribing to Microsoft's "Open" or "Select" volume-licensing programs also complained about the change in licensing but requested anonymity. Several recounted similar stories about Microsoft pressuring them to upgrade Office versions more frequently. "They kept bringing up the BSA (Business Software Alliance) and insinuating about software audits," said one technology manager. "We got the message, all right: Upgrade to Office XP or else."

It should be noted that the manager quoted above wasn't concerned with being nailed for corporate piracy. When it comes to a BSA audit, if Bob in Accounting brings in software from home and sticks it on a couple of PC's, it's the company's problem (and your butt on the line), whether they knew about it or not. It's likely that very few corporations are completely piracy-free under these criteria.

An analyst in the aforementioned story hit the nail on the head when he said "Can Microsoft grow much past 92 percent market share on the desktop? There's no new room for growth for new customers on the desktop. In fact, it's a declining market . . . If you don't have enough more to offer, you're going to squeeze more out of the people using your products." You have to keep the revenue wheel turning, and with such high market share, MS has only two avenues of revenue: New machine purchases (which have lower profit margins because of OEM deals) and upgrades of existing customers.

Then there's Office. It can be argued that Microsoft has made Office too well. In whipping up on WordPerfect and the other competition, MS has painted itself into a features corner; it seems all of the really big improvements have already been made. One reason for the Office XP licensing change is that many customers see no reason to upgrade Office 97, let alone Office 2000. Looking at the differences between 97 and XP, one can see why: It's tough to justify shelling out a couple hundred bucks a seat when the most immediately noticeable change is that Clippy sits on the desktop instead of in his own window.

Of course, at least MS was doing a good job at adding features to successive releases on the NT OS side. Take a look at the features of NT 3.51 vs. NT 4.0 vs. Windows 2000, and it's difficult to argue that MS didn't come up with tons of solid new features for each of those releases (don't even get me started about the 9x side, though).

Unfortunately, Windows XP is starting to show some disturbing trends¬ónamely, adding stuff that doesn't really need to be part of an operating system. Does an OS really need to have an MP3/WMA encoder and CD burning software built in? You have to work hard to find a burner that doesn't come with software, and you can download a fantastic ripper and MP3 codec for free. One way to interpret this turn of events is that MS is running out of legitimately good ideas for what to include in its operating systems.

Setting aside the desktop for a moment, what's gotten less attention so far is that the "upgrade or else" effect isn't limited to Office. Take a look at this link for example, (it's still there as I'm writing this, anyway) which states that you have until September 28th to upgrade Exchange 5.5 to Exchange 2000:

Competitive and Version upgrades will be discontinued on September 28th. Customers who purchase upgrades before September 28th will save over the full product cost.

So after September 28, all the money that companies spent on Exchange 5.5 will mean jack squat when it comes to getting a price break on Exchange 2000. Client Access License fees for those with Exchange 5.5 will jump from $34 to $67 per. Of course, you do get Software Assurance, which means that you get any Exchange upgrades in the next two years for free. Assuming that MS releases one product upgrade in that time (call it Exchange XP) that means you can think of that $67 as $33.50 for 2000 and $33.50 for XP, right? Sure, if it helps you sleep better. But under the old system, you could've chosen to skip 2000 in favor of XP for a total of $34 per CAL, so MS has effectively forced you into upgrading twice.

Of course, Microsoft's upgrade tactics aren't limited to price hikes and implications of software audits; they can also be more subtle. These tactics seem to rest on the laziness of the system administrator, a powerful force indeed. A couple of examples:

Microsoft offers the NT 4 Option Pack as a free download. Among other things, this update adds Internet Information Server 4.0, the last version of IIS released for Windows NT. You can find the download page here, but you'll notice that Microsoft couldn't be bothered to package the files into a self-extracting archive. Consequently, you'll have to separately download all 52 files. Or you could always just upgrade to Windows 2000, which has IIS 5.0 built in (nudge, nudge).

Microsoft released a free upgrade to NT 4.0 called Routing and Remote Access, which has many of the same capabilities as the routing and remote access functionality in Windows 2000. Sound like something you'd like to play with? Good luck finding it. Poking around on Microsoft's site, you can eventually find the FAQ for it and even the licensing agreement, but the actual link to download the thing is nowhere to be found.

After searching fruitlessly for 20 minutes, I turned to Usenet and found an interesting thread on the subject. According to one poster, Microsoft removed all links to the service in August of 2000, and when he asked about it via e-mail, he was told that the RRAS update had "expired and is no longer available." Another poster in the thread managed to discover the original download page here, but all links to it had apparently been removed from Microsoft's web site. No matter, just upgrade to Windows 2000, which includes Routing and Remote Access (nudge, nudge).

There are past sins against NT 4 that have since been remedied. Two that come to mind are the cancellation of Service Pack 7 (which has been rendered much less important by the post-SP6a security rollup) and the Hotfix Checker tool that only worked under Win2K (it has since been expanded to include NT 4). Still, who knows how many people just threw up their hands and went to 2000 before these changes came about? I nearly wept when I saw the number of hotfixes involved in Microsoft's IIS 4.0 security checklist.

One could interpret all of these actions in a number of ways, but I see it as the beginnings of desperation. After fighting so hard to capture the desktop and office applications markets, Microsoft is chagrined to learn that success means having nobody left to whom you can sell products. The only recourse is to sell them to the same people again.

Microsoft's tactics have caused the occasional grumble before, usually among competitors, much less frequently among consumers. But thanks to its latest tactics, the grumbling is getting louder and more widespread. IT managers who would never have considered anything without an MS logo are looking at the new licensing costs and beginning to investigate alternatives. It's impossible to predict the eventual outcome of all this, but there are two diametrically opposed factors here: Microsoft's nearly complete domination of many of its (until now) most lucrative markets, and its need to generate more and more revenue. After fighting off competitor after competitor, Microsoft's biggest threat in these markets may be itself.

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