Resellers wary of Microsoft price hike

Resellers wary of Microsoft price hike

Claims that Microsoft software may be set for a back door price hike has been met with mixed feelings by Australian resellers and an outright rejection from Microsoft.

A new report from Gartner-Group claims Microsoft software could be up to 50 per cent more expensive per year as a result of changes to its terms and conditions.

Gary Cox, director of the Enterprise Group at Microsoft Australia, said Microsoft would not be making dramatic changes to its terms and conditions or its current pricing strategy, at least in Australia.

"We don't agree with the statements Gartner made in its report," Cox said. "We believe the predictions are based on outdated information and changes that were made more than a year ago. There are no plans to change current licensing with subscription licensing in Australia, and if we did it would be in addition to and not instead."

The Gartner report lists Microsoft's corporate licensing agreements as an example of where Microsoft will attempt to increase its revenue, by offering non-perpetual licences as a standard option from 2002. By 2004 this would cost 20 per cent more than equivalent perpetual licences, which do not have to be renewed.

Australian resellers said a price increase would not have a direct effect, but it would make it more difficult for them to sell Microsoft products.

Maree Lowe, ASI Solutions director, said she definitely wouldn't want to see prices rise any further, and any increase would have to come with extra service and value.

"It's a major difficulty for Australian companies," Lowe said. "It's going to be extremely difficult to be competitive. I can't see customers paying more without an increase in services and value adding."

John Perkins, managing director of Balanced IT Services, said he did not think a price hike would affect resellers, as any difference would be passed on to customers.

"If anything it's going to improve our bottom line, because we're selling the same unit with the same percentage margin, so a price rise would increase profits," Perkins said.

"But it might mean customers move away from Microsoft products."

Lowe agreed, adding that with competing companies slashing prices or giving away software, a price increase by Microsoft could allow competitors like Linux to move into some of Microsoft's product space.

Meanwhile, a report from analyst Giga Information Group in the US predicts the cost for companies to upgrade to Windows 2000 will be a hefty sum but the investment will pay off in as soon as a year.

The Giga report estimates companies will have to pay at least $US973 per client to migrate to Windows 2000 Professional and another $107 per client to adopt Windows 2000 server.

Cox said pricing for Windows 2000 was still being formulated in the US and he has not seen it yet.

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