Microsoft Claims That Customers Are Not Abandoning the Company

Microsoft claims that all is peachy when it comes to its volume licensing programs, and particularly Enterprise Agreements, despite a report from Forester titled "Economics And Alternatives To Microsoft's Software Assurance" stating otherwise. According to Forester, Microsoft Software Assurance customers, an unprecedented number of which are facing licensing renewals by the end of 2007, are thinking about abandoning SA. With just 11% of SA clients decided to renew their licenses, Microsoft is facing the possibility of losing what it has referred to as an important stream of revenue.

In this context, following the Financial Analyst Meeting 2007, where volume licensing deals were applauded as one of the main drivers of revenue, the Redmond company is scrambling to applaud additional Software Assurance benefits beyond upgrades. Microsoft focused on additional technologies, technical support, training and access to the latest software offerings in order to advertise Software Assurance.

"A key component of Microsoft's strong revenue performance for fiscal year 2007 was the growth we've seen in annuity billings which is driven mainly by our Enterprise Agreement offering. Forty percent of the company's revenue mix resulted from multi-year license sales, and enterprise agreement renewal rates exceeded the high end of our historic range of 66-75 percent. To sum up, Microsoft's volume licensing business is healthy and vibrant," revealed Joe Matz, corporate vice president of Worldwide Licensing and Pricing.

The Forester report claimed that one of the catalysts for Microsoft clients getting ready to terminate their SA deals was the fact that the Redmond company was keeping them in the dark about its future product roadmap, including releases for the Windows platform. In this sense, Microsoft immediately confirmed Windows Vista SP1 beta for 2007 and Windows Seven for 2010.

"It was mentioned that Enterprise Agreement renewal rates are higher than a year ago. This is a very positive result for the year, and that speaks to the strength of our current product portfolio, our future product roadmap and the value that customers receive through programs such as Software Assurance. For fiscal year 2008, we have a full pipeline of new technologies that should continue to generate interest from customers and thus turn into sales," Matz added.