Insights from Customers and Partners Help Microsoft Create More Flexible Licensing and Financing Options

REDMOND, Wash., Sept. 22, 2004 — Continuing its commitment to communicate directly and consistently about the latest developments in licensing programs and policies, Microsoft today hosted a Volume Licensing Quarterly Update Webcast for its customers intended to help them better plan software investments.

Today’s Webcast also marked the public debut of Brent Callinicos as the new corporate vice president of Microsoft’s Worldwide Licensing and Pricing group, a role he assumed earlier this year. Callinicos, who joined Microsoft as a financial analyst in 1992, previously served as corporate vice president and treasurer. He now oversees Worldwide Volume Licensing programs and policies as well as Microsoft Capital, a customer-financing initiative he developed while in the treasury department.

Callinicos spoke with PressPass about his group’s continuous efforts to make doing business with Microsoft easier through offerings such as Software Assurance and Microsoft Capital financing programs.

Brent Callinicos, Corporate Vice President, Worldwide Licensing and Pricing

PressPass: What are your immediate goals for the future direction of Worldwide Licensing and Pricing at Microsoft?

Callinicos: Our focus continues to be on listening to and learning from our customers and partners. That boils down to providing customers greater choice and enhanced flexibility so they find it easier to do business with Microsoft. Microsoft is committed to helping its partners and customers realize their long-term potential with their software investments. I especially want to continue seeking opportunities to better support our partners that play such a critical role in helping customers achieve business growth and other tangible benefits through Microsoft’s Volume Licensing programs.

PressPass: What are you hearing from customers, and how are you applying these lessons to Microsoft’s Worldwide Volume Licensing?

Callinicos: We’ve been very active in gathering feedback from our customers as well as from partners and analysts over the past year. That’s where those themes of increased flexibility and choice clearly rise to the top. Microsoft is responding with several key improvements to its licensing programs.

Today we officially launched our Product Licensing Web site , a comprehensive site that combines information contained in the Product List and Product Use Rights documents, as well as volume licensing briefs. On the Product Licensing Web site, customers can find licensing terms, conditions and supplemental information related to the use of all products that are licensed through Microsoft’s Volume Licensing programs. We developed the site based on feedback from our customers that said having this information in one convenient place is important in helping them make strategic business decisions about their software purchases. Therefore, we’ve designed the Web site to be easily searchable and to provide up-to-date resources that help our customers better understand how Microsoft licenses its products in the United States and Canada.

Another area where we have taken specific action based on customers’ feedback is in the Software Assurance maintenance offering, which helps customers better predict their software and technology costs, as well as manage related expenses for productivity benefits, training resources, technical support and deployment tools. For example, we’ve responded to their desire for more help with disaster recovery scenarios by adding one cold backup server software license for every server covered by a customer’s Software Assurance agreement. That’s just one item in the current slate of 14 benefits we’ve rolled out to Software Assurance customers as part of our efforts to deliver more value, flexibility and choice.

We also continue to hear positive feedback from customers about the revisions made to our volume licensing contracts last March, in which we extended our warranties from 90 days to one year so customers have greater protection and more time to test their deployment of Microsoft products. Also, we’ve expanded the defense duty covering trade secret and trademark claims to further shield customers from liability related to infringements on intellectual property rights. Similarly, we removed the monetary cap that previously applied to damages that Microsoft will pay when covering patent infringement. Our customers have told us they that if Microsoft is confident enough to go beyond the limitation of its indemnity obligation to protect them from infringement claims related to Microsoft products, our contracts should reflect that commitment. This set of improvements to our volume licensing contracts is one way of providing that assurance as well as making it easier for customers to do business with Microsoft where licensing is concerned.

PressPass: What is Microsoft Capital?

Callinicos: Microsoft Capital Corporation is the financing arm of Microsoft Worldwide Licensing and Pricing that develops and delivers innovative financing programs to help customers acquire software licenses. This is another area of need that many our volume licensing customers have raised over time. We established Microsoft Capital about three years ago to provide flexible programs that help customers achieve their IT goals and maximize their IT investments. Many customers don’t realize that Microsoft has a financing entity, so we’ve been working with our channel partners to spread the word. Financing through Microsoft Capital is now available in the United States, Canada, Mexico, Brazil, Belgium, Spain, Germany, the Netherlands and the United Kingdom. We plan to expand the program in the future.

PressPass: How can customers benefit from using Microsoft Capital for their financing needs?

Callinicos: There are multiple programs under the Microsoft Capital financing umbrella that we’ve tailored to the varying budgetary needs of small, mid-sized and large companies. For example, a program known as Total Solution Financing specifically addresses the needs of small and mid-sized customers for more flexibility in acquiring and financing their technology licenses. Let’s say you’re the owner of a small business and have decided to invest in your IT infrastructure to improve competitiveness. Software is just a part of the solution to the challenges you’re trying to address. You also may need hardware, implementation help and other services to achieve your goals. Negotiating and financing those purchases can be very difficult for small companies, especially when they have to deal with multiple vendors and financing sources. But with Microsoft Total Solution Financing, the business is able to work with a single financing entity to cover all the bases.

PressPass: What’s next on the horizon for Worldwide Licensing and Pricing?

Callinicos: We’re going to keep listening to our customers, partners and the analyst community so we can better learn about what is and isn’t working with our licensing programs. Our whole team is dedicated to using that feedback to guide our future decisions and bring customers greater returns on their investments in licensing Microsoft products.

We plan to continue to develop flexible licensing models that help meet our customers’ current and future business needs. For example, based on hearing from our Software Assurance customers how much value they gained from our Step-Up License program, we have made what was formerly a limited-time promotion a permanent offering in Microsoft’s Worldwide Volume Licensing programs. Many of our customers have achieved significant cost savings by going from the standard edition of products to the enterprise edition through the Step-Up License Program without having to re-purchase a new license.

Also, the recent release of Microsoft Operations Manager (MOM) 2005 introduced the concept of an Operations Manager License, or OML, which is very similar to the CAL, or Client Access License, concept in that only one OML license is required for each server that is managed by MOM. Customers asked us to develop a model that would help simplify both the migration path and licensing of MOM, and we believe we’ve done that by changing the licensing of this product from a per-processor model to more of a server/managed-device model.

Remembering that every customer is unique, we will continue dedicating time and resources to work closely with customers to aid them in their upgrades and ensure they have all the information they need to make the best decisions for their business. We are committed to providing tools and programs that enable our customers to get the most value from their technology investments.