Microsoft's turning tide may strand customers

Gartner's Park thinks Microsoft should give those customers that didn't get a major upgrade a free upgrade to the next major release, but he said Microsoft probably won't do that.

"We at Gartner had called upon Microsoft to offer an upgrade guarantee," Park said. However, "other vendors don't offer upgrade guarantees, so I don't think Microsoft will either."

Microsoft executives argued that Software Assurance is valuable to customers because Microsoft provides more than only the right to get major upgrades, such as product updates and support. Whether to go with an annuity program such as Software Assurance is up to each individual company, executives said.

"We never guaranteed that buying Software Assurance would get you a product upgrade," said Tom Rizzo, director of product management for SQL Server at Microsoft. "If (customers) don't think there is value in Software Assurance, we don't require you to buy it."

Rizzo said there are "shades of gray" where Microsoft may consider giving customers an upgrade beyond the date when their contract lapsed.

Even if the company were to offer Software Assurance customers more, it could backfire, fuelling a perception that customers should wait to upgrade until Microsoft sweetens the pot again. Microsoft has already expanded the SA program to include added discounts, extended support, home-use rights and other perks.

"They are kind of training customers to wait as long as possible because Microsoft is likely to come back with a better deal," DeGroot said. That in turn makes it tough on Microsoft's sales force. "It's very hard to make your quarterly quota if customers keep saying, 'I will wait until next quarter or next year,'" he said.

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Another impact of the various delays is to add further uncertainty to Microsoft's already cloudy product road map. Programmers were told at last October's professional developer conference to start working on Longhorn, though the company now offers no timetable of when the OS might ship.

Furthermore, the company has talked recently of releasing intermediate versions of its desktop and server operating system before Longhorn -- something it previously said was not under consideration.

With Yukon and Longhorn, Microsoft tied nearly all its key product releases to one another, something analysts say adds risk to the development process.