Microsoft to hike price of server apps

Exchange 2000, SQL Server 2000 increases on tap. 'You get more, you pay more' is Redmond's motto
Written by Mary Jo Foley, Senior Contributing Editor

While Microsoft has talked up its history of keeping OS price hikes to a minimum, it's making no apologies for forthcoming price increases on its server applications.

The company's new motto, at least for its 2000-generation back-office server products: you get more, you pay more.

Microsoft is just beginning to inform customers of some of the changes on tap for its back-office applications. Among the more costly apps are Exchange Server 2000 and SQL Server 2000. Both are slated to ship late this summer, as are a number of Microsoft's other server-side products.

"Our prices are higher across the board," acknowledged Stan Sorensen, group product manager for server applications, while speaking about changes to the price of Exchange. "But we're adding tons of new functionality."

Exchange price increases range from as much as $1,300 (about £850) more per server, to up to $20 more per client.

Exchange 2000 is slated to include Active Directory, Office 2000 and Outlook integration, as well as improved failover support.

Sorensen claimed that most Microsoft customers would feel little, if any, impact from the pending changes, in part because customers are moving to consolidate servers, and also because a growing number are buying via Microsoft's volume discount price programs rather than retail.

Pricing of server applications and software tends to be far more complex than PC software pricing -- a phenomenon not unique to Microsoft. And with subscription pricing and Internet connector licenses increasingly part of the mix, things could get even more confusing.

"In the past, Microsoft has made licensing harder and more complicated than it needed to be," Sorensen said.

Going forward, he added, Microsoft is attempting to be "as clear as possible and to be as consistent as possible with (the pricing of) other Microsoft products".

With Exchange 2000, for example, Microsoft is attempting to stick to the Windows 2000 pricing structure already in place -- namely, a server and client-access license(CAL) model. Customers buy a single server license for a particular application, and CALs for each individual who accesses it.

There is no one-price-fits-all scheme, however, even under Microsoft's simpler pricing rules. Customers enrolled in Microsoft's volume license programs (called Select and Open) pay lower prices than retail. And customers upgrading from existing Microsoft products pay lower prices than those who migrate to Microsoft from competitive platforms.

For a 'typical' customer buying at an entry-level volume pricing level, the enterprise edition of Exchange 2000 will cost $1,999 for upgrade customers and $3,999 for first-time users. The add-on Exchange 2000 Conferencing Server will cost $3,999. (There is no existing conferencing product from which to upgrade.)

Meanwhile, the base-level Exchange 2000 Server will cost $349 for upgrade customers, and $699 for first-time users. CALs for all three of these releases will range from $34 for upgrades to $67 for first-time users.

On the SQL Server side, Microsoft is adopting a different pricing scheme. Rather than using the Windows 2000 and Exchange 2000 per-user model, the SQL Server team will offer users a choice of either per-CPU or per-user pricing.

Microsoft SQL Server officials were not available at press time to fill in the details. But SQL Server 2000 is expected to be the first of a number of Microsoft Windows-2000-optimized back-office servers to move toward a per-processor pricing model.

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