Still, the company won't be giving away much in the CAL change, particularly since initially only Windows .Net Server 2003 and Terminal Services would be affected -- and not until April. More than almost any other company, Microsoft has made an art form of wringing money out of every device connecting to its server software, say analysts. A company might pay for Windows XP, but then pay again for the right to access Windows 2000 Server and on top of that for the Office suite's Outlook e-mail and calendar program to access Exchange Server -- after already paying separately for the server products. The same would apply to connecting to other products, such as the SharePoint Portal Server. "My understanding is that with Exchange, for example, the company makes more money from the CALs than it does from the server (software)," said Paul DeGroot, an analyst with Directions on Microsoft. "The key to Microsoft's software strategy has always been to create positive feedback loops," said Jupiter Research analyst Michael Gartenberg. "Microsoft has a broad product line, which spans the range from data-centre-oriented server software at the high end to children's software at the low end, and each of these offerings is centered upon or related to the Microsoft Windows desktop operating system." Microsoft's strategy of integrating products technologically benefits the company from a licensing perspective, too, particularly as the number of server products increases. "Unless enterprises and consumers begin to adopt other offerings and desist from always choosing a Microsoft solution, this strategy will continue to serve them well," Gartenberg said. Still, Microsoft can charge companies for any device connecting to one of its server products. Park also warned not infer any broad loosening of how Microsoft views the licences. "Client-access licenses are a significant form of revenue for their server products," he said. "Microsoft wouldn't do anything that would risk this revenue (stream)." While praising the CAL changes, he also downplayed their significance for many customers. "I don't know that I agree with Microsoft about the benefits to customers." Some other software companies take a looser approach to CALs, which can save larger businesses a bundle of money. Apple Computer, for example, licenses Mac OS X Server in 10-user and unlimited-user versions. Apple also offers a reduced-cost, three-year upgrade option. The 10-user version costs $499 and the unlimited version, which includes use as a Web server, costs $999. Windows 2000 Server with 10 CALs, by contrast, costs about $1,100, and for 25 clients, $1,600. For Web server use, businesses would need to pay about another $2,000 for an unlimited Internet-access license. This Internet-access CAL also will be revamped under the new Windows .Net Server 2003 program. Microsoft is replacing the Internet connection license with something called an "external" connector option. The company apparently found no licensing option that took into account access by business partners to a server over the Internet. "They did not have a good way for business partners to be licensed," Park said. "They grouped the Internet users and business partners." Microsoft has not yet released pricing for Windows .Net Server and has not indicated whether the licensing change could lead to a price increase. "This was in response to some (customer) ambiguity about the Internet connector, and we've tried to clear that up for them," O'Brien said.
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