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Users react to end of Office deal

Microsoft stops offering concurrent application licenses for its Office productivity suite, garnering mixed reactions from users.

Finishing a strategy it started more than two years ago, Microsoft (MSFT) as of today will no longer issue concurrent application licenses, claiming that customers simply do not want such licenses any more. But since Microsoft said last month it would end concurrent licenses, Office users have given the decision a mixed reception.

Concurrent licenses allow organizations to run an application--in this case, Microsoft's Office productivity suite--from a central server and pay for a fixed number of simultaneous users. For example, if the IS manager of a 10,000-person company figures that only 1,000 people will be using Office at any one time, she can buy a 1,000-seat license. To regulate usage, a company also must invest in software that monitors the number of users.

One user at a public university was dismayed with Microsoft's decree.

"I am hoping Microsoft will reverse this decision," wrote Charles Cottle, director of user training and support services for the University of Wisconsin at Whitewater's information services division, in an email message.

Cottle, also a professor of political science, will oversee about 4,000 desktop machines by next fall. He wanted to make Office available to the entire UWW campus through concurrent usage, citing the expense of buying a desktop license for 4,000 desktops.

"If we were to begin with 10 percent of the desktops for concurrent licensing [of Office 97], i.e., 400 licenses, the cost would be $36,000," Cottle wrote. "If, on the other hand, we have to license [per] desktop, the cost is $360,000. For us that's the operational definition of 'prohibitive.'"

However, with the advent of ever-larger and cheaper hard drive space and the complexity of managing network traffic, concurrent usage for many companies is no longer viable.

"We've tried it both ways, and we've found the desktop environment is much better for us than the networked environment," said Robert Galvin, corporate director of information services at Circus Circus Enterprises, which has between 700 and 1,000 Office users.

Circus Circus switched from concurrent usage more than two years ago because it was too difficult to manage in a constantly shifting IS environment.

"The casino environment is not a normal 9-to-5 business environment," Galvin said. "Everything's changing constantly. With this much turnover, [concurrent usage] would cost me a fortune."

Customers such as Galvin would support Microsoft's claim that concurrency is too complicated. But others feel Microsoft's bid to end concurrency is a way to cut its own costs. Two years ago, Microsoft doubled the price of concurrent usage and added extra features, such as the ability to download the applications to the hard drive. But the company also forbade customers from "floating" usage across different time zones. For example, a company with an office in London could use the same 100-user license and shift the workload to the California office when the London staff went home, resulting in big savings.

After doubling the price and putting the kibosh on floating, the percentage of Office accounts using concurrency dropped from the mid-teens, according to 1995 Microsoft estimates, to the "low-single digits," as Peter Boit, the company's general manager for volume licensing, told CNET's NEWS.COM last month.

One customer responded angrily to Boit's remarks.

"Mr. Boit must surely know that the reason the 'Maintenance Plus' customers are in the 'low-single digits' is because of the exorbitant pricing structure, not latent demand in the market," said an IS manager for a large East Coast account who asked not to be identified. "Any time you double the price of a product, sales will go down."

"The cost, even when doubled, was still a good value," Boit told NEWS.COM in response. "We offered the product for two and a half years, and very few people purchased it."

Microsoft rival Corel, whose Word Perfect suite holds less than 10 percent of the corporate office suite market, disagrees with Microsoft's estimation of the demand for concurrent usage.

"The inhibitor is not that concurrent usage requires metering software or that the licensing management is difficult, but that Microsoft is charging a premium price," said Mark Emond, manager of Corel's corporate and education sales programs. "We charge no premium."

Emond claimed that approximately 75 percent of Corel WordPerfect suite accounts have some measure of concurrent usage.

According to market research firm PC Data, Microsoft has 81 percent of the total units sold in the corporate space, while Corel and Lotus Development each have 9 percent. When comparing sales revenue figures, Microsoft's share jumps to 92 percent.

"There is a valid reason for companies to move away [from concurrent licensing], but Microsoft is using that movement as a convenient excuse," said Joel Graves, associate director for client solutions in the biopharmaceutical division of Chiron.

Responsible for approximately 2,500 Office users at Chiron's Emeryville, California, offices, Graves currently has a per-desktop license but wants to move to concurrency.

"We want to get a highly standardized, highly manageable desktop/ LAN environment," he said. "One way [to get there] is to implement application metering. Office is one application where we definitely want to take advantage of [metering] for cost-containment reasons."

"If you say, 'No one wants concurrency, period,' that's an invalid statement," said Rand Morimoto, president of system integrator Inacom Oakland. "But if you add the other criteria to it, it's true [that people don't want it] because of all the confusion."

Morimoto said most of his customers have moved to a per-desktop model, especially since Microsoft added so many criteria to the terms of a concurrent license.

It remains to be seen if Microsoft will take a hit from the concurrent-use discontinuation. Corel's Emond claimed he was able to keep one longtime WordPerfect customer from switching to Office because of the concurrent-use issue. Emond would not name the customer.

Still, even Redmond's detractors don't see much standing in Microsoft's way.

"There aren't a lot of alternatives," said Chiron's Graves. "It's a forced march."