Under the new Software Assurance (SA) system, companies would pay an annual fee of 25 percent of a server license and 29 percent of a desktop license. In exchange, the customer gets unlimited free upgrades of that particular operating system or application as Microsoft releases new versions.
At the time, it was a tough sell. To many it looked like more of a Revenue Assurance program to guarantee Microsoft a steady flow of income, rather than anything that would benefit purchasers. It meant that customers would start incrementally paying for future upgrades years before Microsoft released the products. In three-and-a-half years, they would have paid the equivalent of a full license cost for a new desktop version, and four years for a server product.
"Buyers should purchase SA if they plan to upgrade to a new version that is released within 3.5 years for desktop applications and operating systems, or four years for server software," said Gartner Inc. research director Jonathan Mein. "Microsoft needs a product release cycle that meets these periods."
But there was no promise that Microsoft would come up with a new product in that time period. If not, then customers paid more than if they had waited for the new release and bought it outright. And that is more or less what happened. The first batch of SA contracts are now coming up for renewal, without Redmond coming out with a significant software release.
In March, Microsoft announced a delay in the release of the next version of SQL server (Yukon) till the first half of 2005. News followed that Longhorn, the replacement for Windows XP, wouldn't be out till the first half of 2006, four-and-a-half years after the release of XP.
In order to continue the SA program, and without alienating its customers, Microsoft needed to thoroughly revamp it. One option was to release incremental software updates with greater frequency so that updates were guaranteed to occur during the contract period. The other was to stick with the planned releases, but increase the value of SA. In September 2003, therefore, Microsoft released a new SA program with a load of attractive features.
As with the earlier version, the main component is the ability to upgrade the software. But there are number of other options to make it more appealing. Among these are: