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Microsoft boosts revenue through licensing complexity

Microsoft could makes its licensing easier to understand, but might well lose money in the process.

One of the advantages to being a large, enterprise software company is that it can provide your sales people with a wide array of products to sell to new and existing customers. Upsell and cross-sell opportunities abound.

As a customer of such a vendor, however, this selection can be as confusing as it is appetizing.

Such is the case with Microsoft and its bewildering licensing forest, according to The Register. As Microsoft adds another layer of complexity to its offerings - that of "cloud-based services" - its licensing complexity is poised to become even more Byzantine, a headache-in-waiting for Microsoft's channel partners, which sell the majority of its software:

Resellers can expect to contend with a different biz model to simply punting software...Now it's not just about software but hosted services, migration and integration, business process consulting and desktop managed services as well. That's a fact that could prove a big headache for some.

[Microsoft] sees it more as an "opportunity for partners to see revenue growth in a number of areas"....[but] Ovum analyst David Mitchell, a guest at Microsoft's central London event, said the firm had presented its resellers with "too many logos and too many questions".

He added that Microsoft was "lacking real simplicity for partners to interact with". Indeed his comment received one of the morning's biggest round of applause, which perhaps best highlights the true, nervy feelings being expressed by the channel right now.

On the one hand, Microsoft stands to make more money as it adds different ways to pull money out of the same software. On the other hand, its channel is apparently tired of having to sort through the complexity to feed Microsoft's toll gate. Customers, for their parts, tend to like Microsoft's software but could do without the pricing complexity.

Microsoft could provide easier pricing scenarios, pricing per CPU or per server, for example, and dumping its aggravating (and confusing) CAL-based pricing. But there's money in complexity for Microsoft, so don't look for a reprieve any time soon. Microsoft's licensing complexity has served it well for far too long to change it now.