Licensing Changes – Microsoft SA Benefits Trimmed

By Directions on Microsoft

A Software Assurance (SA) renewal grace period and an SA benefit that gave employees discounted Microsoft software have been eliminated. The changes may signal that Microsoft is taking a closer look at SA benefits that do little to promote SA but raise Microsoft’s costs.

The changes affect two elements of the SA program, the Employee Purchase Program (EPP) and the SA renewal grace period.

EPP Benefit to End

The EPP will expire Nov. 15, 2010. It lets an organization’s employees purchase a broad range of business and consumer software and hardware (including Xbox games and Zune music players) from a Microsoft Web site. EPP overlaps with the Home Use Program (HUP), another SA benefit that continues to be available, which lets employees purchase a copy of Office for home use. The EPP offered employees a greater choice of software than the HUP, and the HUP offered less incremental value, since even without SA, Office Standard and Professional Plus users have the right to install a second copy of Microsoft application software on a portable computer.

However, Microsoft found customers were far more likely to purchase important products like Office through the HUP than through the EPP. The cost of Office through EPP, although discounted significantly, was still higher than its cost through the HUP. In addition, access to the EPP was very restrictive: customers not only needed SA on Office licenses but they also had to have SA Membership, in which they agreed to purchase SA on all desktop applications, including Project, Visio, and Visual Studio. Even among customers eligible for EPP, Microsoft says utilization of the benefit was very low.

As compensation for the loss of the EPP, Microsoft will give customers a 15% discount to purchase any Microsoft product (except computers) at the Microsoft online store between Nov. 15, 2010 and Feb. 15, 2011. The store sells a larger range of products than were available through the EPP. For example, employees could buy Xbox game consoles through during this time.

SA Grace Period Eliminated

The grace period for renewing SA has been eliminated in most volume purchasing programs, for agreements signed in 2010 or later. The grace period let customers renew SA up to 30 or 90 days (depending on the volume agreement) after their volume licensing agreements ended. Customers who want to continue SA benefits should plan renewal of their license agreements ahead of time: if they let the agreement expire, recovering their SA rights will require the purchase of new licenses, to which they must then add SA. The grace period has been eliminated for all Microsoft volume licensing programs except Open License, where a 90-day grace period continues.

Detailed rules about SA benefits and renewal can be found in the monthly product list, available at www.microsoft.com/licensing/about-licensing/product-licensing.aspx#tab=2.

Earlier Versions Available for Download

Customers will have easier access to older but still popular software, as Microsoft makes downloads of “N-2” editions of several important products available to volume licensing customers. The change will be particularly useful for Windows XP and Office 2003 stalwarts who continue to reimage new computers with that software, pursuant to their downgrade rights.

For most products, Microsoft’s Volume Licensing Service Center (VLSC) offers only the latest (N) version and the previous (N-1) version of the software. In July 2010, Microsoft announced that it would give customers access to downloads for the following N-2 products:

  • Windows XP
  • Windows Server 2003.

In Sept. 2010, the following N-2 products will also become available:

  • Office 2003
  • SQL Server 2005
  • Exchange Server 2003.

In addition to meeting customer demand for older products, the policy reflects Microsoft’s success in shifting from a fulfillment system based on disk kits to fulfillment through downloads by default for most customers. The download center can easily host installation files for older products, but distribution of disk kits that included older software was more costly and less convenient for both Microsoft and customers, who needed to secure and track volume installation media for the products they license. In some cases, customers may not have disks for older product versions that they are entitled to use, or they may not have the latest builds (e.g., they have only disks for Windows XP SP1, which is no longer supported), and they were unable to download them from the VLSC.

Interest in N-2 products could remain high because of a recent change to the policy on Windows 7 downgrade rights. Downgrade rights to Windows XP from Windows 7 for OEM products were originally set to expire after 18 months or the first Windows 7 service pack. Those rights will now continue as long as Windows 7 can be licensed.