For the past few years, Microsoft has been conducting experiments in various countries as to how and whether "renting" software could become a viable business model. The answer seemingly must have been yes, since Microsoft quietly added rental SKUs, as of January 1, to the list of license types available to customers worldwide.
Though some industry watchers consider Microsoft's various annuity licensing options -- like Software Assurance, via which users pay for the right to use Windows, Office, and other Microsoft products, in chunks over a period of three years -- to be "rental" programs, they technically aren't. Under the newly introduced rental program, a customer would pay a flat fee to use Windows or Office 2007 (Standard or Professional versions) for a year.
The new rental rights specifics are explained further on Microsoft's Partner site:
"Windows desktop operating system and Microsoft Office system licenses do not permit renting, leasing, or outsourcing the software to a third party. As a result, many organizations that rent, lease, or outsource desktop PCs to third parties (such as Internet cafés, hotel and airport kiosks, business service centers, and office equipment leasing companies) are not compliant with Microsoft license requirements.
"Rental Rights are a simple way for organizations to get a waiver of these licensing restrictions through a one-time license transaction valid for the term of the underlying software license or life of the PC."
According to the partner site, the new rental rights SKUs are now on the Microsoft Product List for volume licensees. The additive licenses are available to those with Microsoft Open licenses, Microsoft Select/Select Plus and government licenses. In other words, a customer must buy stand-alone licenses of Windows and Office in order to "rent" the software. The new license modifies the licensing terms, rather than replacing the underlying Windows and Office copies. The new license also bans the rental of virtual machines running Windows or Office, according to Microsoft's Partner site.
Directions on Microsoft analyst Paul DeGroot said he considered the worldwide availability of licensing rights to be a big deal.
"Microsoft has not allowed customers to rent software on their computers (it is forbidden in the End User License Agreement), but they began experimenting with this in some high-piracy, low-income markets last year. Suddenly on January 1, the geographic restrictions are gone, and rental prices are on the US price list," he said.
The new rental option "could give a boost to Internet cafes, companies renting rather than buying computers, etc.," DeGroot said. "It also could be good for seasonal businesses who could rent additional PCs for a short time, then send them back."
To attract interest in the new rental program, Microsoft is offering a promotion (through the end of June 2010), via which a rental version of Office Professional is available for $58 (regularly $83 via volume discount pricing). Office Standard (rental) is available for $45 per copy (as opposed to $64 per copy regularly.) Windows is available for $23 per copy (as opposed to $32 per copy), DeGroot noted.
"Those sound quite attractive, considering they are one-time (not annual) prices, and rental outfits can spread the cost across a lot of customers," DeGroot said. "Prices may also be different in other geographies."
DeGroot said the new licensing offer could be another way for Microsoft to try to convince users of older and illegal versions of its software to upgrade.
Making software available under a rental license "suggests that Microsoft sees this as something that small companies or -- who knows, even big ones -- would want to do. It's also another way to try to reduce the drag from 'good enough,' particularly for Office, since you can't rent licenses for earlier versions of Office (even though customers under volume license agreements can still purchase older versions, as far back as Windows XP)." It's worth noting that in emerging markets and some outfits with Internet cafes and kiosks, the older versions may be the only ones that will run on older hardware in use, DeGroot noted.
The new rental program also is another way Microsoft is trying to reduce piracy, DeGroot said.
"To use the rental license, you must have a licensed, Pro version. This is a bit quaint -- pirates in the third world have been renting any version of Windows and any version of Office for years, and the cost of legal Windows Pro licenses as well as even more costly Office licenses that you need to buy before you can even buy the rental license add-ons will put the shop using legal licenses at a severe price disadvantage to the shop renting pirated versions, but hope springs eternal...."
Microsoft has been testing Office rental programs for more than two years. The company has been testing an Office "pay-as-you-go" rental program for a pre-paid version of Office Professional in India, Indonesia, Bulgaria, Lithuania and Egypt, South Africa and Romania.
In related news, some Microsoft volume licensees still seem to be having problems accessing Microsoft's newly redesigned Volume Licensing Service Center. (The Register reported VLSC access problems back in December, 2009.) On January 11, Microsoft officials publicly acknowledged and apologized for the problem via the company's SMB Community blog, attributing the difficulties to a new registration system. Microsoft is advising those who are still having access problems to try a list of informational Web sites (supplied in the aforementioned blog post) or contact the company directly.
Update: As reader "Rich From Bechtle" noted in the comments, the VLSC access problems aren't over yet for a number of Microsoft users. His blog post on the matter contains plenty of complaints from Microsoft customers who were stymied by the VLSC problems throughout the holidays and beyond.