The launch of new and revised Office 365 software-by-subscription plans for businesses shows that Microsoft realizes its current licensing revenue is threatened by cost-cutting customers, an analyst said yesterday.



From Computerworld:

"Microsoft wants to shift people to subscriptions because you cannot stop paying for a subscription," said Paul DeGroot, principal at Pica Communications, a consulting firm that specializes in deciphering Microsoft's licensing practices. "What they're facing is a lot of Office revenue potentially dropping off the books as customers stick with their perpetual licenses but stop further payments to Software Assurance."

Firms regularly pay for "Software Assurance," an annuity-like maintenance agreement that gives customers the right to future upgrades in return for annual payments spread over three-year terms. The problem with Software Assurance (SA) is that while Microsoft upgrades Office every three years, few businesses follow suit. Instead, enterprises take years to roll out an edition, skipping one or even two of the upcoming versions before again repeating the process.

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