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Microsoft slashes Software Assurance maintenance costs

Microsoft slashes Software Assurance maintenance costs

Deep discounts to stop enterprises walking away from support contracts

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Microsoft is cutting the cost of its Software Assurance maintenance packages in a bid to stop recession-hit companies opting out of support.

Until July 3, large companies and organisations can sign up to subscribe to Microsoft Office 2007, Windows Vista, or two bundles of client access licenses (CALs) for server software and save more than a quarter off the list price, according to the Web site, MicrosoftIncentives.com.

Software Assurance is a requirement of several Microsoft licenses, such as Enterprise Agreement and Open Value, and adds between 25% to 30% of the license cost per year, in addition to the license itself.

Cutting maintenance or support contracts with software vendors has become a popular way for corporate users to cut costs during the downturn.

It is relatively painless for companies to cut SA and stay on the current version of software, which they own the right to run indefinitely, anyway, Paul DeGroot, an analyst with the independent firm Directions on Microsoft said.

Microsoft's discounts for its Enterprise Subscription Agreements are an all-out effort by the vendor to retain customers on some sort of plan, DeGroot said.

"One reseller I talked to says he has never seen Microsoft doing this level of promotion and price cutting in the enterprise space," he said. And "from Microsoft's point of view, they'd rather have a low-priced subscription customer than a customer who simply didn't renew their Software Assurance. They're still making lots of money off it."

Companies with 250 or more PCs are eligible for Enterprise Subscriptions in three-year terms.

With Microsoft's heavy discounting, the subscriptions should be attractive to many customers, DeGroot said.

"If you're going to be using the Microsoft desktop and CALs for the foreseeable future, it's the least expensive way to do it, and actually would have been a really good choice for companies in a downturn: as your seats go down, so do your annual costs," DeGroot said.

"The tradeoff is that if you stop the subscription [because of employee layoffs, for instance], you lose the licenses," which a company may need later when it starts rehiring.

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