Steve Ballmer and licensing: the video

ZDNet UK was at Microsoft's London HQ yesterday, listening to Steve Ballmer talk about Windows 7, Server 2008 R2 and matters appertaining. We weren't allowed to ask questions, although customers in the audience were.
Written by Rupert Goodwins, Contributor

ZDNet UK was at Microsoft's London HQ yesterday, listening to Steve Ballmer talk about Windows 7, Server 2008 R2 and matters appertaining. We weren't allowed to ask questions, although customers in the audience were. They were good questions, too: one of the best was about the complexity of Microsoft's corporate licensing and the unwelcome, inquisatorial habit of Microsoft's auditors in trying to find breaches of fine print. The question got the only spontaneous round of applause of the day, and Ballmer took it seriously.

Which is not to say he actually answered it. He seemed to be saying that simplification is unacceptable because it either increases or decreases cost: if it decreases cost, the shareholders are unhappy, if it increases cost, the customers aren't happy. One might point out that that's not a matter of simplifcation, that's a matter of cost. The questioner didn't actually say that the fine print was there as a deliberate ploy to increase revenue: Ballmer, however, seemed to admit that sometimes, it was.

Make your own mind up. We captured the question and answer on video, or you can read the transcript below.


Questioner: On the subject of licensing, particularly application virtualisation and general virtualisation, some of Microsoft licensing is full of challenging fine print which for some of us is difficult to work our way through, and if I'm brutally honest when we are audited by your esteemed colleagues occasionally they focus on trying to trip us up on the fine print, which we're not trying to do.

I would appreciate your thoughts on simplifying the licensing of applications and the licensing process.

("Hear, hear" - applause)

Ballmer: Think I'll answer after the rousing applause you got.

Let me say something. I don't anticipate a big round of simplifying our licences. I'll explain why in just a minute. It turns out that every time you simplify something, you get rid of something. Usually what we get rid of, somebody has used to keep their prices down. So, I mean this seriously The last round of simplification of licensing we did was six years ago. I can guarantee that the licence we had was simpler when we got done, but it turned out that a lot of the footnotes, a lot of the fine print, a lot of the caveats, were there because someone had used them to reduce their costs.

I'm not sure the goal is... I know that we'd all like the goal to be simplification, but I think the goal is simplification without price increase, and, and, our shareholders would also like it to be simplification without a big price decrease. So what we're really trying to do is help people use the products and use the licences the way we intend.

There may be fine print that's sometimes a gotcha that's deliberate and sometimes there's a gotcha that our people are finding and shouldn't be out hassling about. ah... specific feedback is welcome. Because any time we embark on... and we have looked at it recently. Should we simplify our licensing?

Almost always it comes back to things that people use to reduce their price. Let me give you an example. We have with our SQL server product the ability for customers to licence it per processor, or license it per server and pay CALs. The simplifying thing would be to eliminate one. Of course, why do customers like what we have? They hate what we have. We have two forms. But the customer always finds the approach on which they pay us less money. So if you run a chain of 100 small restaurants, you kinda like this server CAL thing, because it's cheaper per restaurant than the per proc thing. On the other hand, for the guy who wants to build an application that maybe 30,000 people will use in a big company, the per proc thing looks cheap.

And I'm sure we have fine print we don't need. I'm not trying to say we are saints. I am trying to say that if we're doing any kind of simplification we need to be driven by things that customers want us to do as opposed to driven by kind of, ah, the purity of the art of simplification. 'Cos last time we did that, I'd say we succeeded on simplification, and our customer satisfaction numbers plummeted for two and a half years. So. Don't want to do that again.

If people have specific things where you think it is just complicated, or we have provisions that really seem to drive cost that is unnecessary, I encourage you to send me a piece of mail. I deal with the specifics probably better than I deal with the principles, because I feel caught in a bind on the principles, as I just explained.

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