Microsoft's Software Assurance (SA) maintenance program will continue to be optional, even though it is less widely adopted than competitors' offerings.
Research company Gartner in April this year noted in a report that Microsoft could make its maintenance services mandatory by 2009. This is because the adoption of SA among Microsoft customers is lower than rivals SAP and Oracle, which have 90 to 95 percent, respectively, of their customers on their maintenance programs, Gartner said.
But Joe Matz, vice president of Microsoft's worldwide licensing and pricing, maintained that "SA is an optional program and there are no plans to change that". He was speaking on the sidelines of Microsoft's global partner conference held here this week.
Sunny Jensen Charlebois, Microsoft's senior product manager for worldwide licensing and pricing, was unable to provide details on how many of its customers have SA agreements.
Still, Gartner estimates that only half of Microsoft's customers with more than 1,000 desktops worldwide have purchased SA for Microsoft Office or the Windows platform, and only 65 percent of this clientele are renewing the maintenance program. Charlebois, however, said the renewal rate of SA agreements stands at 75 percent.
According to Gartner, uptake and renewal rates of maintenance programs are important because analysts and investors in enterprise software companies typically expect a very high percentage of customers to purchase and renew maintenance. They relish the predictability of this annuity stream, to complement the higher, but spiky license revenue stream.
To beef up adoption of its maintenance program, Microsoft in March introduced 18 new and enhanced SA benefits including 24-hour support, an increase in the number of available software training days, support during desktop deployments and access to Windows Vista Enterprise, a premium business edition of the company's upcoming operating system.
To sweeten the deal further, Microsoft on Wednesday unveiled a program that turns older PCs--which cannot run Windows XP--into thin-clients. Called Windows Fundamentals for Legacy PCs, the software is exclusive to customers with SA agreements.
At the same time, to meet the needs of businesses that deploy virtualization technology, Microsoft also said it is giving Windows Vista Enterprise customers the right to install four copies of the operating system in virtual machines on a desktop for a single user.
Despite the added incentives, Gartner noted that many Microsoft customers are still lured to SA primarily because of the rights to software upgrades. As a result, when the gaps between Microsoft's new software releases and upgrades grow wider--in the case of Windows and SQL Server--customers start questioning the benefits of inking a maintenance deal with the software vendor.
But Matz reiterated that SA is more than just about upgrades. To help customers realize the benefits of the program, Microsoft also launched a Forrester ROI Software Assurance tool that allows customers to determine the value of benefits available in the maintenance service program.
He added: "A customer can now quantify the value of SA, and how it applies to them beyond software upgrades."
Matz also dismissed possibilities that Microsoft, keeping in line with industry practices, might turn its free software service packs into exclusive benefits for customers with maintenance agreements.
"We have no plans to charge for service packs," he said.
Gartner pointed out that while any move to charge for service packs could raise Microsoft's SA customer numbers by 30 percent, security patches are likely to remain free because of the negative impact on the Microsoft brand should a virus outbreak occur.