IBM didn't become a US$100 billion-a-year business by playing the discount game.
So it's indicative of the company's eagerness to loosen Microsoft Office's grip on enterprises that it has unveiled support pricing for its Symphony office suite that analysts say makes an attractive case financially for switching software.
IBM said last week that it will provide unlimited remote support for up to 20,000 Symphony users for a flat fee of US$25,000 per year.
Consumers and businesses can still run Symphony, a heavily modified version of the open-source OpenOffice.org software IBM announced last fall, for free.
Buying IBM Elite Support gives customers access to 24/7 support with a guaranteed response in two hours, albeit only via phone, instant message or e-mail.
IBM Elite Support would cost as little as US$1.25 per user per year if a customer had exactly 20,000 users. But companies can only buy it in increments of $25,000, meaning the cost for 20,001 Symphony users would be $50,000, not $25,001.25.
"For the enterprise customers [IBM's] focusing on, it's very cheap," Melissa Webster, an analyst at IDC, said in an e-mail. "Even US$25 per user per year for a 1,000-person company is pretty cheap."
Moreover, Symphony support is free for the more than 100 million existing users of its sibling Lotus Notes corporate e-mail client software. Support subscribers must take part in IBM's Passport Advantage volume-licensing program, which Webster said is also free.
How does that compare to Microsoft Office? According to Paul DeGroot, an analyst at Directions on Microsoft, the cost of licensing Office 2007 via an Enterprise Agreement (EA) with Microsoft is US$155 per year, or $3.1 million for 20,000 users (though there are discounts for those buying other desktop-related software from Microsoft).
That EA would include a subscription to Microsoft's maintenance and support program, Software Assurance. According to DeGroot, "companies do get some support incidents with SA, but it's pretty trivial, like one support incident for every US$200,000 in SA expense. Microsoft isn't nearly as liberal with SA support incidents on desktop software as it is for servers (even though customers pay more for SA on desktop software)."
As a result, many companies still need their own help desks to aid users with desktop issues, including problems Office, which incurs additional costs, said DeGroot.
(For a detailed fiscal analysis from an IBM point of view, see the Symphony blog.)
IBM's support for Symphony also compares favorably with the cost of Sun Microsystems Inc.'s support for OpenOffice.org and its proprietary US$70 sibling, StarOffice.
For 20,000 users, Sun charges US$9 per user annually for standard support for OpenOffice.org, and $11 per user annually for premium support, according to a spokeswoman, who did not disclose how much that per-user price varies for different numbers of users.
Even at 20,000 users, Sun's price still works out to be between seven and nine times higher than IBM's. However, "given that Sun created OpenOffice.org and is still the major contributor of OpenOffice.org, customers who purchase support from Sun have some unique benefits -- namely getting direct access to OpenOffice.org engineers, which means faster response time and easier path to get feature requests into OpenOffice.org," the spokeswoman wrote in an e-mail. "This is IBM reacting to Sun since Sun is the innovator in the market."
She said Sun has "several" companies subscribing to its OpenOffice.org support but declined to elaborate.
IBM claims that about a million people were already beta-testing Symphony before last week's launch.
With the U.S. economy in trouble, why wouldn't a big company concerned about costs jump to Symphony right away? For one, there is the cost and time of migrating users off Office, both in terms of retraining them and physically deploying the software, DeGroot said. That is a potentially huge expense, considering that most experts see the migration to Office 2007 from earlier versions of Office as a long, expensive move.
There are technical reasons, too. For instance, Symphony is unlikely to be as good a front end for Microsoft's popular SharePoint Server collaboration software as Office is.
Symphony is also based on OpenOffice.org 1.1 source code, which was released in the fall of 2003. OpenOffice.org 3.0 is in beta now, with a final release expected this fall.
IBM emphasizes how involved it is in OpenOffice.org development, and how much it has rewritten Symphony. But some users and OpenOffice.org officials have wondered why IBM would base Symphony on something "well past its sell-by date."