Microsoft Software Licensing

1. Microsoft Software Licensing Bill Landefeld (billl@microsoft.com) Vice President, Worldwide Licensing & Pricing Laura DiDio and Rob Enderle Giga Information Group Giga ExecuTel – 25 July 2001

2. Agenda • Background • Licensing 6.0 • Enterprise Agreement Subscription • Enterprise Agreement • Select • Timing • Conclusion Microsoft Software Licensing – 7/25/01

3. Business Trends • Businesses must respond rapidly to remain competitive • Both the delivery & usage of software are evolving • Customer focus evolving from acquisition to entire lifecycle of deployment and management Microsoft Software Licensing – 7/25/01

4. Customer Requests • Simplicity • Programs with less complexity • Easier administration, compliancy • Choice • Licensing and support offerings that address needs over the entire IT lifecycle • Comprehensiveness • Integrated licensing, support and service solutions • Predictability Microsoft Software Licensing – 7/25/01

5. Licensing 6.0 Changes • New Subscription Licensing Option for Enterprise Agreements • New Software Assurance Offering • Better License Management Tools • New Streamlined Sales Process Microsoft Software Licensing – 7/25/01

6. New Licensing Offerings Microsoft Software Licensing – 7/25/01

7. Enterprise Agreement SubscriptionA New Choice for Customers • Subscription rights • Non-perpetual product usage rights • Buy-out option (1.5 x third year fee) • Easy administration • Annual PC count • Lower upfront costs than traditional EA • 15% less than new EA price • Break-even with EAs at 5 – 6 years • Can be treated as operating expense • Possible tax advantages in some countries Microsoft Software Licensing – 7/25/01

8. Enterprise AgreementNew Features • Assured lower renewal pricing • Easier addition of non-platform products • Lower entry minimum – 250 seats • Replace SQL Server with SharePoint Portal Server (SQL available as Additional Product) • Option for Premier Support in single agreement • Streamlined sales model Microsoft Software Licensing – 7/25/01

9. EA and EA SubscriptionComparison Microsoft Software Licensing – 7/25/01

10. SelectNew Features • Software Assurance • Simplified purchasing and management • Multi-year upgrade program • Predictable annual payments • Priced at average upgrade rates • Alignment between EA and Select • Term will be 3 years; price level alignment • Online tracking and management tools Microsoft Software Licensing – 7/25/01

11. Simplifying LicensingExample: Office • Purchasing Upgrades • Varied eligibility – VUP, CUP, PUP, LUP, UA • SKUs – 000’s • Asset Management Microsoft Software Licensing – 7/25/01

12. Online Management Tools • Licensing Services Online for Enterprise Customers • License purchase reporting for all programs • Electronic software downloads for EA & Select customers • Agreement information • Passport-enabled and available worldwide in multiple languages • Benefits • Reduced administrative and management costs through consolidated reporting • Faster and easier access to up-to-date information and software • Ability to export information for use in other applications Microsoft Software Licensing – 7/25/01

13. Online Management ToolsSelect Forecast Summary Example • Graphical representation of customer performance (orders) offers a quick read on achievement against commitment. • Performance Detail shows the numbers behind the graphs. • Enrollment Contributions helps customers under-stand the distribution of license orders across their enterprise. Microsoft Software Licensing – 7/25/01

14. Licensing 5.0 and 6.0Comparison Licensing 5.0 Licensing 6.0 Open, Select, EA Different terms, price levels BackOffice CAL VUP, VUP, PUP, LUP, UA Indirect model for all programs Separate licensing, support enrollments eOpen 1.0 for Open customers No Select, EA tools Open, Select, EA, EA Subscription Select, EA consistency in terms, price levels Core CAL Simpler upgrade via SA or EA Ent. Software Advisor support EAs Licensing support enrollment for EA, EA Subscription eOpen 2.0 eLicensing for Select, EA Subscription, EA customers License Programs License Offerings Sales Process Administration Microsoft Software Licensing – 7/25/01

15. Licensing 6.0Program Overview Enterprise Agreement Subscription Select License Enterprise Agreement Perpetual usage rights SA option available Entry minimum based on purchase forecast Pay-as-you-go Based on License & SA Usage Rights Software Assurance Minimums New Licenses Pricing Perpetual usage rights SA built into offering Entry minimum based on number PCs (250+) Lump sum payment for new PCs ~20 – 35% discount over License & SA in Select Non-perpetual usage rights with buy-out option SA built into offering Entry minimum based on number PCs (250+) Annual payment based on current PC count 15% discount over new EA Microsoft Software Licensing – 7/25/01

16. Timing and Transition Dates • Licensing 6.0 programs will be launched on 1 Oct 2001 • Timeframes to be aware of • May 10, 2001 – September 30, 2001 • 5.0 programs still in place • Upgrade SKUs still available • Software Assurance not available • October 1, 2001 • 6.0 programs replace 5.0 programs • Software Assurance SKUs available • One-time upgrade SKUs (VUP, CUP, PUP) no longer available • October 1, 2001 – February 28, 2002 • Software Assurance and Upgrade Advantage available for customer’s installed base of current licenses Microsoft Software Licensing – 7/25/01

17. Enrolling in Software Assurance Microsoft Software Licensing – 7/25/01

18. Conclusion • Licensing 6.0 • Simplicity – Software Assurance, web tools • Choice – EA 250 PC entry, EA Subscription • Integration – EA Premier Enrollment, sales process • Timing and Key Dates • Questions? Thank You ! Microsoft Software Licensing – 7/25/01

19. Additional Materials • http://www.microsoft.com/business/licensing/ • Select & EA post-sales, operational questions from customers: SelQuest@microsoft.com • Microsoft Sales & Information Center: General sales, product and price information, licensing information, and information on Microsoft marketing materials: 1-800-426-9400 • Microsoft Sales Fax Service: Self-service for white papers, product data sheets, technical notes: 1-800-727-3351 • Microsoft World Wide Fulfillment to purchase extra sets of media and books: 1-800-248-0655 Microsoft Software Licensing – 7/25/01