Microsoft to cut school software licensing costs

The software giant will work out licensing agreements with UK educational institutions using a new method that could reduce costs for schools by up to 50 percent
Written by Ben Woods, Contributor

Microsoft is set to change the way it calculates licensing fees for schools, which could lead to cost reductions of up to 50 percent, according to the company.

The new scheme, which begins on 1 March, will see schools pay for software licences based on staff numbers rather than the number of computers, Microsoft told ZDNet UK on Monday.

"Changing the model so it is based on a school's Full-Time Equivalent (FTE) staff count, rather than counting all of a school's computers, reflects the fact that times are changing; economic, sociological and societal factors are adapting," Steve Beswick, senior director for education at Microsoft, said in an email. "Schools are investing in more technology, resulting in more computers, but less staff for them."

Beswick says that schools could save up to £100m over a five-year period, depending on the ratio of FTE staff to PCs.

"As with any business model, it is not always a perfect fit for everyone. However, via the Microsoft EES [Enrolment for Education Solutions] licensing scheme, the majority of schools will benefit," he said.

Schools whose current agreements were due to expire in December, January or February will be granted an extension to their contracts until 1 March, at which point they can be renegotiated. Schools with contracts running from before December 2010 will need to honour their current contracts before being able to renew them using the new system.

Microsoft has adopted the new model now in a bid to stay competitive in the market and in response to "changing economic, political and technological landscape", Beswick added.

Public-sector savings
Analyst Clive Longbottom, founder of research and analysis firm Quocirca, said that the move could largely be seen as protective.

"As the public sector moves towards stringent cost savings, it is inevitable that public-sector IT will come more under the microscope, and that licensing will be a large part of that. There are a lot of lobbyists in the market who point out that there is everything that a student will need available through open source, and, as such, no one in the public sector should be paying the 'Redmond Tax'," he said.

Microsoft has commerce on its side, but will have to face the short-term vision of the politicians combined with the hard lobbying of the open-source community.
– Clive Longbottom, Quocirca

However, Longbottom also said that while this is correct, businesses are generally looking for Windows skills, not Linux.

"Complete retraining for Windows from Linux is too expensive for the mid-market and SMB, and the large organisations will just assume that Windows familiarity is built in to new starters. So, Microsoft has commerce on its side, but will have to face the short-term vision of the politicians combined with the hard lobbying of the open-source community," he added.

In addition, Microsoft is expected to announce low-cost plans for Office 365, the cloud-based version of its Office suite of software, tailored to schools and universities in the near future, Longbottom said.

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