Windows licensing costs could double

Industry analyst Gartner has warned that changes to Microsoft's licensing policy will double the cost of Windows for up 60 per cent of enterprise customers.

Industry analyst Gartner has warned that changes to Microsoft's licensing policy will double the cost of Windows for up 60 per cent of enterprise customers.

The change refers to the practice of 're-imaging' new PCs, where the software that comes on a new PC is overwritten by a company's standard desktop, including applications and a customised Windows configuration.

Microsoft now says this practice requires a Windows upgrade licence, which costs between $117 (£77.82) and $157 per PC, even if the PC is re-imaged with exactly the same version of Windows supplied by the manufacturer.

The software giant argues that re-imaging a PC replaces the Windows end-user licence agreement (Eula) originally supplied by the manufacturer.

Gartner analyst Neil MacDonald said he has email correspondence from Microsoft that shows the company did not previously object to this practice. "This is a new interpretation of the licensing agreements. Most resellers will not be aware this is now Microsoft's policy," he said.

MacDonald said Microsoft's previous policy was to warn customers that they would be disqualified from receiving manufacturer-supplied technical support if they overwrote the Windows Eula. Microsoft is now calling its large customers to sell them the upgrade licences, and will use this issue in contract negotiations, said MacDonald.

Gartner estimates that 60 per cent of companies with more than 500 users load corporate software imagery over the top of new PCs, using products such as Symantec's Ghost.

The analyst said resellers should offer to deliver PCs with a company's chosen desktop pre-installed on top of the original equipment manufacturer (OEM) Windows. Buying a Microsoft Enterprise Agreement will also get round this problem, but is cost-effective for only the largest companies, said MacDonald.

Neil Laver, Windows 2000 product marketing manager at Microsoft, admitted that much of what Gartner has said is factually correct, but accused the analyst of scaremongering. "Most companies don't follow this particular scenario. Most build their [software image] on top of a OEM version of Windows."

Laver confirmed that customers should buy an upgrade licence if they use a software image based on Windows Select media, but said to his knowledge Microsoft has always had this policy. He said it is crazy of Gartner to suggest that Microsoft is generating revenue by exploiting the fact many customers are not aware of this.

"If people [from Microsoft] are ringing round customers, then that's just our business managers making people aware of the situation, to clarify and inform. The prime motivation is not to sell upgrade licences," said Laver.

Microsoft Select is a software purchasing programme aimed at companies with between 100 and 10,000 PCs, and covers Windows and various Microsoft applications.

First published in Computer Reseller News