Editor 9-Mar-01
Software Licensing and You

Software licensing is changing drastically as technology changes - directly impacting your business.




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1. Non-PC Devices

As non-PC computing devices become increasingly common, focus moves away from the PC industry and towards the entertainment industry. Just about everyone is aware how fanatically the entertainment industry defends it's "properties", so this is bound to affect software licensing.

You can expect to see a strong move to copy protection, including copy protection built into the hardware of the device itself. You can expect even more legislation to be passed under the $$influence of entertainment industry lobbyists to make it easy to prosecute anyone suspected of interfering with copy protection or playback controls.

Much of this is bound to spill over into the PC world as the entertainment industry applies pressure to cash strapped hardware manufacturers. Expect to see hard disks that detect copyrighted songs and movies and refuse to store them. Business software publishers will, of course, take advantage of these same features to enforce their licenses.

2. Software as a Service

Microsoft has long wanted to lease software rather than sell it, so they don't have to keep coming out with new versions to keep revenue flowing. With a software lease you have to keep on paying for the same old product.

Competition prevented Microsoft from transitioning to the lease model, but now their monopoly is essentially complete. With no significant competition they can do whatever they want. Most people will just pay rather than move to a non-Windows platform.

Contributing to this transition will be Microsoft's .NET initiative. .Net means software remains on Microsoft servers rather than being loaded onto your hard disk. If your monthly payment falls behind, you simply have no access to this software (or your business data).

.NET requires "always on" Internet connections, so Microsoft will have continuous access to your computers and can monitor and enforce license compliance. UCITA gives them the right to check your computers for license violations and to reposes software for any real or imagined violation, without your knowledge or permission.

[ UPDATE: 28-Mar-01 - Microsoft just realeased rules for consumer PCs to get a Windows XP seal. They include "Wake on Net", a feature used to administer PCs in very large organizations. There can be only one reason for this in a consumer PC - Microsoft wants the ability to wake and examine your computer at any time. ]

Microsoft's Revenue Growth

To maintain it's stock price (and the wealth of its executives) Microsoft must sustain a growth rate that is, well, unsustainable. Their attempts to move into other markets have not done well, except where they can (illegally) leverage their monopoly. To make up for the deficit they turn increasingly to license revenue.

By manipulating license terms they have doubled, and even tripled the cost of Microsoft Office and other products to their larger customers without raising the stated prices (but those keep drifting up too).

Considering "software piracy" a major pool of potential revenue, Microsoft has been tightening up registration requirements. Expect that to continue. Beyond that, they are escalating their enforcement efforts, through the BSA, and are focusing enforcement on smaller and smaller businesses. While these businesses don't individually yield as much revenue in fines and penalties as larger targets, they are far more numerous and essentially defenseless.

Other Windows software companies (the few that remain) will do whatever Microsoft does. Your only escape from this license mill would be to move to Linux and other Open Source packages where costs are low and licensing a non-issue. Few businesses will take this path, not because it isn't practical, but simply because it is different, and "everyone is using Windows, so we have to".

Our article Software Licensing will help you better understand the costs and risks, and your rights and responsibilities.

- Andrew Grygus

©Andrew Grygus - Automation Access - www.aaxnet.com - aax@aaxnet.com
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