Microsoft bets big on a new platform subscription license

Microsoft quietly started rolling out a new subscription licensing option, known as Application Platform Agreement (APA) at the start of this year. But it is in the coming Microsoft fiscal year, which kicks off on July 1, that the APA will start gaining some serious traction, the Softies predict.

Microsoft quietly started rolling out a new subscription licensing option, known as Application Platform Agreement (APA) at the start of this year. But it is  in the coming Microsoft fiscal year, which kicks off on July 1, that the APA will start gaining some serious traction, the Softies predict.

Microsoft execs will be talking up the new APA license at the company's upcoming Worldwide Partner Conference in New Orleans in mid-July, hoping to get its partners onboard with selling Microsoft's core enterprise products via the APA.

The APA -- which is somewhat like the company's existing Software Assurance (SA) license -- is an add-on to Microsoft's Enterprise Agreement license, which it offers to business users who buy in volume. It is a subscription license, meaning that users who pay for it are entitled to upgrades to the covered set of products for three years. (Microsoft receives recurring revenues even if it doesn't release updates to the covered wares in that period.) The Directions on Microsoft research firm has described APA as an "all you can eat" license for Microsoft's server products.

The APA is focused on products that Microsoft considers part of its "application platform." To date, company officials have defined the Microsoft app platform as Visual Studio, SQL Server and Windows Server. More recently, the Redmondians have been rounding out the Microsoft application platform to include a bunch of other products -- everything from SharePoint Server, to System Center, to Dynamics CRM.

The Dynamics CRM offering (both the on-premise and the Microsoft-hosted versions) is one of the newest additions to the line-up Microsoft and its partners will be offering to corporate customers under the APA license.

Brian Patterson, Director of Product Management for Dynamics CRM and CRM Onlinesaid Microsoft is in the midst of adding Dynamics CRM to that license to help shore up its xRM strategy, via which it is encouraging partners and customers to build new apps on top of its core relationship-management engine. Dynamics CRM is one of the three "required" products (the other two being Visual Studio and SQL Server), one of which users must choose to purchase via the APA license, Patterson explained. The "recommended" products that Microsoft is offering via APA to these users include BizTalk Server, System Center and SharePoint Server, he said.

Just a few years ago, Microsoft was positioning its CRM offering as a mid-market product, Patterson said. But "now we're seeing broader-scale adoption, with lots of deals over 1,000 seats," he said. Moving CRM under the APA could spur enterprise sales of CRM and CRM Online further, he said.

Microsoft is touting the APA as suited for companies or government agencies which are consolidating vendors, "will benefit from a predetermined fee for unlimited deployment," and are currently spending or plan to spend $300,000 on SQL Server during a three-year period, according to the company's Web site.

Shortly after Microsoft first introduced Software Assurance (SA) in 2001, it bombed. A number of users felt they weren't getting their money's worth from a subscription-licensing program -- in spite of Microsoft's continued efforts to push users to it using a carrot-and-stick approach (i.e., some features and products are only available to SA licensees.) I'm curious whether the APA license will be better received. Any Microsoft users been pitched on an APA and/or bought into it yet?

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