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Technology Corridor

Microsoft's licensing practices push three utilities to re-evaluate their software needs.
Fortnightly Magazine - May 1 2003

away from Microsoft products, Fitzgerald says. "The Code Red worm just killed us," he admits, "and that's when we made the decision to get away from Microsoft products."

Fitzgerald says that his department spends a great deal of time applying patches for Microsoft servers and workstation software. "That in itself has pushed us further away from Microsoft than their licensing," he says. "We know that licensing is a problem, but it's not as big a problem as security vulnerabilities [in Microsoft products]." Westar has moved its software development platform to Java and is looking hard at using Linux for an operating system.

Opting Out of Budget Pain

Otter Tail Power Co., like a lot of companies in America, has gone to a four-year upgrade schedule for computers and software. It was exactly this trend, according to many analysts, that motivated Microsoft to launch Licensing 6.0-to shore up sagging licensing revenues as companies delayed upgrades.

Because Otter Tail upgrades on a four-year cycle, signing up for even a Select License made little sense for the company, says Scott Wendorff, workstation specialist at the company. Typically, he says, the company upgrades 100 to 200 of its 700 computers a year. "We didn't think the pain of all that money up front would be beneficial for us," Wendorff explains.

So the company opted to participate in the Open Licensing program, which allows it to pay for licenses as it decides it needs them. This year, Wendorff says, the company might buy 100 licenses, or possibly even less. Licenses themselves cost more when purchased under the Open plan, but the fees are paid when the licensee chooses to upgrade.

Scrambling To Recover?

Otter Tail's plans are hardly music to Microsoft's ears. Nor is Westar's active look at Linux. As Julie Giera, an analyst at Giga Information Group, puts it, "Microsoft's arrogance got the better of them."

Companies have said they don't want to be the victim of Microsoft, Giera points out. The Licensing 6.0 program inadvertently opened the door for Linux and StarOffice, the productivity suite that runs on Linux, she says.

Giera says that the potential customer revolt really set Microsoft back on its heels, and as a result, the company has made changes in the Licensing 6.0 program that benefit customers. For example, Microsoft now allows licensing either by seat or device, which Giera says is a boon particularly for companies with mobile workforces. Also, to soothe customer complaints about the high cost of licensing under the new program, Giera predicts that Microsoft will add more maintenance and support for licensees.

Despite the splash that Linux has made in the wake of Microsoft's licensing stumble, Gierra doesn't think that Linux gained more than 1 to 2 percent of Microsoft's market share. But it was certainly enough to make Microsoft nervous. And in the end, that nervousness may translate to better licensing deals for all of Microsoft's customers, including utilities.

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