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Enterprises: Get ready to pay to go slow on Windows 10

Gregg Keizer | Jan. 28, 2015
Details remain murky, but Microsoft's biggest customers will have to pay for a traditional update cadence, say analysts.

Software Assurance (SA) is an annuity-like agreement that comes with a bevy of benefits, notably upgrade rights, in return for fixed payments over the life of the contract. Historically, businesses primarily paid for SA to receive those OS upgrades.

But Microsoft will turn that on its head, said Michael Silver, an analyst with Gartner Research, and require SA to not upgrade immediately. "Certainly, for Windows Enterprise, you'll need current SA and that will get you the long-term servicing release," Silver said in an email reply to questions, referring to the lock-down track. "It's still unclear for Pro, and it's also unclear for the middle update cadence of 120 days."

Windows Enterprise is available only to customers with volume licensing agreements and SA. The Pro edition is a step below Enterprise, and can be purchased in single copies or via volume deals.

Like Silver, Frank Gillette of Forrester envisioned Microsoft offering a two-track approach to Windows 10 updating, but acknowledged that the Redmond, Wash. company has provided "only the barest details so far."

He also thought SA might be the key to delaying updates and upgrades in the enterprise, but wasn't as certain. Another option, said Gillette, would be a true subscription.

"When Microsoft says 'Windows as a service,' that means they believe Windows 10 will have continuous value and that they should get continuous payment," Gillette opined. That "continuous payment" could be in the form of SA or a more straight-forward subscription; Gillette wasn't sure.

But there are certainly solid business reasons why Microsoft might move that way. "That would eliminate the motivation [on the part of enterprises] to skip Windows editions. Microsoft wants to take away the financial and process barriers to upgrading," Gillette added.

Although neither Silver or Gillette said as much, one option for Microsoft would be to require SA for Windows 10 Enterprise, and a new subscription-style payment for Windows 10 Pro, for those who wanted to delay or lock down updates.

Revenue from those subscriptions, whether the traditional Software Assurance or something new, could make up for some of the Windows revenue decline reported by Microsoft yesterday in its fourth-quarter earnings call.

Before Microsoft releases Windows 10 -- its latest timeline is an opaque "later this year" -- it will have to explain its ideas for enterprises and specify the accompanying costs.

Gillen said that would happen: Microsoft has told him it will have an enterprise-specific event or presentation where it will go into detail on the release cadence and its business implications. "But I don't know when or where," Gillen said of the promised briefing.

 

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