Does Microsoft complicate its licensing on purpose?

Recent comments from the company's CEO suggest the company has little interest in simplifying its licensing any time soon

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.

Elop said Microsoft has made its pricing for CALs, as well as the process for buying them, as flexible and painless as possible, and that CALs are one of the company's most popular licensing items.

"[They're] very successful on our price list," he said. "When you look at how they license the CALs, the customers have recognized there’s tremendous value derived from bundling CALs together, licensing the suites. We have all sorts of ways of making it easier for customers to take advantage of these things."

However, that success probably stems from CALs being a requirement for many Microsoft licensing agreements, leaving customers little choice in the matter, said Paul DeGroot, an analyst with Directions on Microsoft who has closely studied Microsoft's licensing.

"Customers do not particularly like them -- they have to buy them," he said.

Customers dislike the CAL system for several reasons, DeGroot and others said. One of its most daunting aspects for a company is knowing whether it has enough of them. Because of that, customers end up buying more than they need, thus paying for licenses they aren't using, DeGroot said.

On the other hand, customers sometimes don't have enough CALs and find themselves in violation of a licensing agreement if Microsoft investigates, he said. "They are impossible to track, and because they're impossible to track, customers can very easily get in very serious trouble for not having the right CALs and the right number of CALs," he said.

The CAL-counting system is particularly difficult when a customer has to re-evaluate a license at the end of its term, and count the number of people inside the company who have access to each product that requires a CAL, said Stephen Hultquist, principal of Infinite Summit, Boulder, Colorado.

Hultquist serves as an independent CIO to many small companies, and he said companies that are growing quickly or are constantly in flux with their employee count have an especially hard time keeping track.

"CALs are the most evil thing Microsoft has ever done, especially for someone who has to manage the number of users in an organic organization where you have to be flexible," he said.

Scott Noles, director of technology and education at Microsoft customer Kinex Medical, in Waukesha, Wisconsin, agreed that making sure his company is compliant with Microsoft's licensing terms is difficult, even when he has made a concerted effort to do so.

"If people ask me, I say I'm pretty sure I'm compliant," he said. "I believe we've done our due diligence, but would that hold up under tight scrutiny? I don't know if I've missed a license agreement or if one has expired or not. There are situations where I just don't know because it's too confusing."

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Elizabeth Montalbano

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