More than half, 53%, of large companies and two fifths of small and medium-sized businesses (SMBs) are paying more for Microsoft’s software under the plan. Just 2% of large businesses and 8% of SMBs said they are paying less.
That’s according to new research into Microsoft’s licensing and installation base conducted by Jupiter Media, which has also uncovered the scale of SA’s relatively poor uptake.
Microsoft has kept exact numbers of customers enrolled in SA close to its chest, but Jupiter said just 16% are using SA or the older Upgrade Advantage (UA) program.
Jupiter, which surveyed 619 key IT decision makers at large companies and SMBs, also found that 31% of large organizations are not on any volume pricing agreement with Microsoft compared to three quarters of SMBs. Jupiter defines large companies as those with more than $50m in annual revenue.
Microsoft is facing a huge problem in its volume and upgrades business. SA has proved resoundingly unpopular with customers, even though Microsoft has attempted to enhance features through training, home-use rights and other offerings.
Company CFO John Connors recently told Wall Street analysts Microsoft expects that just 10% to 30% of former UA customers will renew their SA contracts. Jupiter’s research of increased costs also challenges Microsoft’s contention customers would save money under the program.
Jupiter senior analyst Joe Wilcox said SA and the accompanying round of changes to licensing introduced with SA, as Licensing 6.0 in 2002, had failed from the perspective of customers. You can sweeten the pie, but do customers want those sweeteners? Companies really care about cost, Wilcox said.
He noted SMBs preferred to upgrade software by buying off the shelf while larger organizations would buy when – and only when – they wanted, instead of joining a program like SA that offers just the prospect of an upgrade in return for some form of payment.
Microsoft needs customers to upgrade, in order to realize the business potential of a customer base dominated by legacy versions of Windows and applications. If it can convince these business to switch, Microsoft can maintain its business based on upgrades.
According to Wilcox, Microsoft’s customer base is fragmented, because companies run multiple versions of old Microsoft operating systems and applications. Jupiter’s research found 40% of large businesses still use Windows NT, 61% running Windows XP and 72% using Windows 2000. On applications, 32% are still running Office 97. Wilcox called Microsoft its own biggest competitor.
Microsoft was unavailable for comment.
