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Microsoft boosts Office upgrade

The software giant promises advanced versions of Office applications for customers who've signed up for a controversial licensing plan.

Microsoft revealed a "step up" promotion Monday for its new Office software, offering advanced versions of Office applications for business customers enrolled in a controversial new licensing plan.

The promotion applies to business customers who have signed up for one of several licensing plans imposed two years ago that lock customers into periodic upgrades and who are set to receive the standard version of Office 2003 when the software is released in a few months.

Office Standard Edition 2003--one of the six main packages of the revamped suite--consists of the Word, Excel, Outlook and PowerPoint. Under the step-up promotion, customers will be entitled to use the versions of those applications included in Office Professional Edition 2003.

The "professional" versions of the applications vary mainly in their support for Extensible Markup Language (XML), the Web services and back-end software standard that has become the main corporate selling point for the new Office. Office Professional applications can use custom XML "schemas"--blueprints that specify the meaning of various data chunks--allowing for tighter integration with back-end software

Paul DeGroot, an analyst at research firm Directions on Microsoft, said the differences in XML support among different Office 2003 packages has been poorly communicated, and the step-up promotion may be intended to head off potential disappointment among customers.

"Microsoft has made a big deal out of the user-defined XML in particular...and until last year, that was going to be one of the standard features in Office," he said. "They notified people fairly late about this distinction between the professional and standard versions."

Dan Leach, Microsoft's lead product manager for Office System, agreed that news of the distinctions between the professional and standard versions of Office 2003 came too late for some customers to factor it into licensing decisions. "We understand that some Software Assurance customers might have made a different purchasing decision last year...had we announced last year that there was differentiation between the different Office 2003 applications," Leach said. "This is an easy way for customers to feel sure that they made the right choice."

The offer applies to business customers who buy software from Microsoft under Software Assurance and Upgrade Advantage, licensing plans that the company introduced last year partly in hopes of locking in recurring revenue. The plans proved a tough sell to business customers because they dramatically increased software costs in many cases.

Microsoft later tried to mollify customers with changes in licensing terms that provided additional services and privileges under the new plans, including the right to use the same copy of a piece of software on an office PC and a home machine.

A similar step-up promotion will be offered to customers who buy the standard version of Microsoft's Project project-management software under similar licensing terms. Both offers are valid for customers enrolled in supported licensing plans any time from Sept. 1, 2003, through March 31, 2004.

Contracts for initial Software Assurance subscribers come up for renewal next year, DeGroot noted, and Microsoft needs to make sure customers feel they're getting their money's worth.

"It is important for Microsoft to show customers who buy Software Assurance that Microsoft values their loyalty, their business," he said. "They want to make sure these people are happy with the ongoing upgrade rights and other forms of support they get."