Don’t sign up to any Windows 10 operating system upgrade until Microsoft has clarified the licensing terms, technology lawyers have warned businesses.

Many enterprises will be fettered to Microsoft in a number of ways. They may have hundreds, or even thousands, of Windows-installed devices (from desktop PCs to mobile), run internal apps dependent on the Window platform and their developers need to be testing any new updates to the operating system to see what interoperability issues might arise.

So Microsoft's announcement that it is going to deliver its next Windows operating system upgrade “as a service” should make businesses wary - especially since the vendor has not made it at all clear what this actually means to enterprises. 

Microsoft’s more recent announcements about its Office suite is no less confusing. The vendor is releasing two sets of Office for Windows 10 apps - one for smartphones and tablets with screens smaller than 8 inches and another for all other touch-enabled devices (including desktops). And each set could come with different license terms.

Meanwhile, Microsoft says that business customers need to have a “commercial license” - yet another unclear term, but may refer to enterprise Office 365 subscriptions - to use the new Office apps for work. But where will this fit in if they have an enterprise Office desktop license but no Office 365 subscriptions?

Enterprises will want to test the new Microsoft products, but they also need Microsoft bring some fundamental clarity to its licensing regime before investing in the next versions Windows and Office.


Windows as a Service?

So what do we know so far about the licensing model for Windows 10 for business customers? Not that much, it turns out.

In the official blog post announcing Windows 10 last month, Terry Myerson, executive vice-president of operating systems at Microsoft, referred to it as “Windows as a Service”. As well as being a free upgrade for consumer customers running Windows 7, Windows 8.1 and Windows Phone 9.1 who upgrade to Windows 10 in the first year after launch, Myerson wrote that Microsoft “will continue to keep it current for the supported lifetime of the device - at no cost”.

“We’ll deliver new features when they’re ready, not waiting for the next major release. We think of Windows as a Service,” Myerson writes.

This certainly sounds like Microsoft is marketing Windows 10 as a subscription-based service - to consumers at least.

The message to enterprise customers is less clear.

“With Windows 10, a best practice we recommend for many enterprise devices is to connect to Windows Update and be kept up-to-date with the latest security and productivity improvements as soon as they are available,” Myerson continues.

He directs enterprise customers to more relevant information provided by Microsoft’s director of program management, Jim Alkove. The only problem is that Alkove is no more explicit about what enterprise customers can expect from a new licensing model - even if he does use all the right buzzwords normally associated with a subscription-based service.

“We will continue to deliver exclusive value and offer extensive flexibility in how Windows 10 is deployed and managed as Windows evolves to become a service,” Alkove writes.

“Business customers will be able to opt-in to the fast-moving consumer update pace, or lockdown mission critical environments to receive only security and critical updates to their systems. And businesses will have an additional option for systems that aren’t mission critical, but need to keep pace with the latest innovations while having the benefits to install updates after they have been tested in the broad market.

“We expect that most corporations will require a mix of these options to accommodate their business scenarios.”

Complex terms

When it comes to software licensing, Jenny Hotchin, technology lawyer at law firm Ashfords, points out that understanding the terms of the license is one of the biggest issues. As someone whose job is to read the terms and conditions of software licenses all day, she should know.

“It’s often very complex and a lot of terms are used that don’t mean the same thing to everybody,” she says.

“[With Windows 10] we are not actually sure what the licensing model is going to be. There was a comment made about Windows as a Service - but it’s possible it may be misunderstood as software-as-a-service (SaaS). It seems to be drawing some similarities with SaaS, but there is a distinction between software as an application and software as an OS.”

The main difference is that an OS needs to interact with different applications, and links with a lot of systems, whereas applications can be changed or updated without affecting other apps, Hotchin explains.

“I wouldn’t make any decisions until it is absolutely clear about what the model is going to be for the business going forward,” she suggests.

“It doesn’t mean they won’t introduce a subscription-based model - but until that’s understood, it would be prudent for businesses to wait.”

What businesses shouldn’t do is assume that a subscription-based model means that it will definitely be cheaper. Although this will, of course, depend on the size of the business and their use of IT.

“[A subscription-based model] is great as it more closely aligns use with what you pay for. From a value side, it’s an attractive model,” Hotchin says.

“But in the long term, it’s not necessarily cheaper if there are continual changes to the software which you have to update. You’ve got training of staff costs, changes of other software [connected to the OS].”

This will be particularly challenging for businesses that have a lot of bespoke internal software connected to the OS, that would need to be updated with each OS update.

Questions businesses need to ask

Once Microsoft makes the details clearer, Hotchin advises businesses to consider some key questions before they decide to upgrade.

Firstly, they should understand what their future IT plans are, and how it fits with their wider IT estate. For example, with the trend towards more cloud computing services, businesses should ask themselves how will any move to cloud impact their use of operating systems, such as Windows 10?

Luke Scanlon, technology lawyer at Pinsent Masons, adds: “The key for businesses is to think about computing over the long term and not the short term. How to run a large organisation effectively using new technologies is completely changing. They don’t want to get locked into the wrong environment. It really has to be a model that is going to be useful for them in five years’ time.”

Secondly, enterprises need to think about the indirect costs of upgrading. Hotchin says that one of the biggest costs of a large software upgrade is the cost of staff retraining. This means that businesses need to think about their staff training budgets and resources before upgrading.

Luke Scanlon, technology lawyer at Pinsent Masons, agrees that while it is attractive to move from a “need-to-update” version of Windows to an “always-updated” version, businesses also need to think about the exit terms of the software licences.

“[Businesses] can’t just cancel a subscription. They have to think about transition and exits of licenses,” he says.

Governance and security are also increasingly important issues to consider.

“The more you move to subscription and cloud-based models, the more you have to think about data privacy, security and the control,” Scanlon says.

Business model for the future

Although details of the business model for Windows 10 is murky for enterprises, Hotchin and Scanlon agree that Microsoft’s announcements are a clear indication of a change in direction for the computing giant.

“This is Microsoft building a business model for the future,” says Scanlon. “As we all know, the way we are working is moving away from desktops to a mobile world. In the B2B PC world, Microsoft isn’t really competing with anybody else except itself. That worked well for them [in that market] but that doesn’t work so well for the mobile world.

“Microsoft sees the business model as dying and not fit for the mobile world.”

Hotchin adds: “[With the shift to cloud] people are going to buy IT differently. I do believe there’s going to be a shift in where the power lies because of that shift.”

“If you’re going to have those very complex terms, other options are going to become available. All the big players are going to have to sit up and listen.”

Image credit: Microsoft