The summing of parts may leave MS alone

Microsoft's final phasing out of concurrency licensing has isolatedit from its software competitors.

Microsoft's decision last week to put the final nail in the concurrency coffin has restarted an old licensing argument.

Concurrent software usage, which allows volume customers to pay for their software on a per-user rather than a per-seat basis, has always been a hot potato for Microsoft (PC Dealer, 12 November). So much so that enterprise customer and channel sales manager Steve Beswick declined to comment on the issue. Instead, he issued a prepared statement, saying: 'This is a business-based decision. Over the past two years overall sales of concurrent licences have been declining.'

There are two broad schools of thought concerning concurrency. The Microsoft line, used to justify the recent phasing out, is that concurrent licences are too complicated for IT departments and resellers to maintain, and increase the risk of piracy. Microsoft also claims that current licensing packages are tailored in such a way that concurrency does not bring any real savings.

But critics of the decision argue that charging for software on a per-machine basis means some customers may be paying for up to four times more software than they actually need.

If a company has 1,000 machines, it will now have to buy 1,000 licences, even though it may only have 400 regular users - clearly not a cost-effective system. Scrapping the facility for concurrent licences is thus perceived by many to be a cynical exercise in driving up prices.

Concurrent licensing developed in the early 1990s on the back of pressure from utilities companies. Originally designed to prevent piracy, metering software showed that large corporates were paying above the odds for software.

But concurrency has always been an administrative nightmare, and Microsoft maintained its complexity was too much for IT departments to manage.

When the Select 3 reseller programme was launched in 1995, a concurrent licence, available under a facility called Maintenance Plus, was a cost-free part of the programme. But in 1996, Microsoft's then reseller channel manager Chris Lewis announced that the vendor was to phase out concurrency, incurring the wrath of customers and resellers. And that summer it pushed resellers to switch from the per-user to the per-machine model.

But a few months later, after some well-publicised corporate switches to Lotus in protest, Microsoft caved in to pressure and reintroduced the facility - at a cost.

A senior source at one direct Lar claims that concurrency is, therefore, more a PR problem than a genuine glitch in Microsoft strategy. 'These days concurrency doesn't actually cut costs that much, but it is perceived by customers to be a cost saver so it tends to get people up in arms.

'But enterprise customers today receive such significant discounts, and the costs associated with Maintenance Plus are so big, that real benefits from concurrency are negligible,' he says.

Several volume resellers point out the obvious but fundamental fact that the more licences customers buy, the more revenue they receive.

One concedes: 'At one stage Maintenance Plus was the golden goose of Select because it was a market differentiator you could capitalise on. But fewer customers are interested in it these days.'

Licensing administrators who work with Select and other programmes agree that they could do with one less administrative hassle. 'Select is complicated at the best of times,' one commented, 'and Maintenance Plus was somewhat of an Achilles heel for a lot of people.'

One Select licensing manager argued that to reap any financial rewards from concurrency a company would have to license software on the basis of four or more users to one licence. Any smaller ratio and the Maintenance Plus surcharge would cancel out the shared licence saving.

Channel sources agree that if anyone is to suffer as a result of the new ruling, it will be educational customers. The MD of one Lar claimed that dropping concurrency would hit the market hard. 'Money is very tight in the education market, and this could drive customers away from Microsoft,' he said. At a time when the vendor is wooing the sector in a big way, the move seems ill-conceived.

Other customers which may suffer include large companies with long-standing concurrency agreements. An IT administrator at one large multinational feared costs would rise by about 10 per cent next year when the last vestiges of concurrency are phased out.

Scrapping the per-user licence may hit some customers in the pocket and will certainly sting the educational market, but most resellers will remain unaffected by the changes. They may even bring more money.

But questions have been raised about the longer term implications of Microsoft's approach. Anthony Picardi, VP of software research at IDC, said that the move was a regressive step. 'Software administration is changing. As we move towards component-based software, where small components are downloaded from the server, storing software on the client will become an anachronism and software licensing will have to become concurrent.'

Microsoft has been isolated by the responses of other software vendors, notably Lotus and Corel, all of which released statements announcing their commitment to a concurrency model. One analyst commented: 'Microsoft's licensing strategy is evolving into a Frankenstein's Monster. The system works at the moment, but it has only bought itself more time.'