Microsoft Extends Office Upgrade Deadline

Bowing to customer pressure, Microsoft has altered its revamped Office XP licensing scheme, giving business users additional time to upgrade their licensing agreements, the company announced Thursday.

When Microsoft launched Office XP in May, it also announced it was to discontinue its former licensing practices by eliminating version upgrades. Users would have until October 1 to upgrade their licensing rights. After October 1, users would have to buy new licenses for Office XP--at a cost of to $300 more per user--if they wanted to have upgrade protection.

The launch of Office XP started the clock running on how long corporations have to extend their old licenses, but Microsoft has now extended that deadline until February 28, 2002.

Slight Extension

The transition period for the new licensing scheme, which Microsoft calls its Licensing 6.0 programs, has been slightly extended in two ways, as a result of customer requests, Microsoft says in a statement.

Customers with current licenses for recently released products such as Windows 2000 Professional, Office XP, Windows 2000 server, and the .Net enterprise servers now have until February 28 to sign up for Microsoft's Software Assurance program--an extension of one month from the previously announced deadline of January 31.

More significantly, those who need to upgrade licenses for older versions of Office products have the additional five months to pay for what Microsoft is calling the Upgrade Advantage program, Microsoft says. The Upgrade Advantage gives consumers an upgrade to the current license and extends their Software Assurance program for two years, Microsoft says.

While companies using Office 95, 97, and 2000 need to make upgrade decisions before the February 28 deadline, they don't have to actually deploy the product by that date. Under the Software Assurance program, users must have a license to upgrade to the current version of the product, now Office XP, or pay significant costs to get that license.

Upgrade Advantage

If customers join Upgrade Advantage before February 28, they have to pay the full retail price of $292 per user, per year, and receive the rights to an Office XP Professional upgrade and up to two years of Software Assurance. But after February 28, companies will have to buy new Office XP licenses for $454. The optional Software Assurance is another $131 per user, per year.

In May, Microsoft announced it intended to eliminate version upgrades, instead pushing a variety of non-perpetual licensing agreements, or limited-use contracts, which Microsoft claims will keep users running the latest software versions. The license upgrade will not be available after the deadline, so corporations are, in effect, being forced to figure out by February 28 if they want to spend money now on protecting license upgrades or just upgrade to Office XP altogether.

And to further tempt corporate users to just upgrade to Office XP, Microsoft is offering a reduced price for Office XP until October 1.

The decision to delay an upgrade could mean $1.5 million in extra licensing costs for an organization with as few as 5,000 seats of Office. In addition, customers running Office on Windows 95 will have to upgrade their operating systems because Office XP does not run on that platform.

Creating a Controversy

But consumers and analysts reacted quickly to the change, accusing the software giant of simply attempting to keep its revenue model afloat with costs that could force corporate customers into paying an additional 30 percent to 70 percent each year.

Making no reference to the current controversy over higher costs, Microsoft says that it is offering the license registration extensions to allow companies to include the costs of any upgrades or new purchases into their budgets for the next calendar year.

Microsoft says that the extensions in the licensing agreements will affect Open and Select customers, covering five-plus seats per office and 250-plus seats per office, respectively. The extension will not cover Enterprise Agreement or Enterprise Agreement subscription customers because those agreements already have the Software Assurance benefit.