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In Spite of Confusion Among CIOs, Microsoft Says No to Changing Its Licensing

By Christopher Mohr, TMCnet Contributing Writer

Microsoft has no plans to make changes to its licensing, according to CEO Steve Ballmer (News - Alert), who recently spoke at Gartner Symposium/ITxpo 2013 in Orlando, Fla. The announcement is a disappointment to those who feel that the company’s licensing programs are too complex, making them difficult to comply with.

For many enterprises, managing Microsoft (News - Alert) licensing is at best a challenge and at worst a harrowing experience that makes IRS audits and medieval torture chambers pale by comparison. Products come in multiple SKUs and allow for a variety of licensing plan combinations. What’s unclear is which plan combinations are allowed and which aren’t.

The confusion has led to the creation of a whole new industry of third-party vendors, whose sole purpose is to conduct software audits and help customers comply with the terms of licensing agreements. It is often the case after software audits are performed that more money must be shelled out to Microsoft to get back into compliance.  

One consequence of Microsoft’s licensing policies is that it has caused many companies to switch to Google Apps. Google (News - Alert) has much simpler licensing with only two SKUs for the solutions it offers to businesses.

Ballmer’s defense of not changing Microsoft’s licensing is that the company upset many customers when it tried to simplify licensing back in 2002. The perception was that Microsoft had raised its prices and allowed less time for upgrades.

According to Microsoft, changing from a PC-based software company to a cloud-based provider will lead to simplified licensing, “These will be simpler to consume and purchase than our software was,” said Ballmer.

It’s hard to believe that moving to the cloud by itself will change much. Cloud-based Office 365 has been out for two years and has the same multiple SKU and complex licensing problems of other Microsoft products. Furthermore, the complexity of Microsoft’s licensing plans may actually be more lucrative to the company.

This isn’t 1995 when the computing world was centered on PCs that at a minimum had Windows pre-installed on them. Companies can always switch to Google and even those who don’t want to let go of the idea of PC-based software can use Apache Open Office for free.

These options do not begin to consider the mobile device software market, which Microsoft only has a single-digit share of. Sooner or later, Microsoft will have to change its ‘King of the Mountain’ mentality. If it doesn’t, the Redmond, Washington-based software giant may suffer the same way HP does now, where the only way to be profitable is to lay people off.