Microsoft partners oppose new licensing scheme • The Register

Microsoft’s partners appear to have balked at Redmond’s “New Commerce Experience” licensing program as the software giant noted a slower-than-expected transition to the agreement in its third-quarter 2022 earnings.

The company today announced typically robust results: Third-quarter revenue reached $49.4 billion, up 18 percent year-over-year. Cloud revenue grew 26 percent to $19.1 billion, with Azure and other cloud services growing 46 percent.

Dynamics grew 22 percent. The commercial incarnation of Office increased revenue by 12 points, one point ahead of Office’s consumer services. LinkedIn grew 34 percent. Windows surfed the PC boom, posting 11 percent growth from sales to computer manufacturers, while Windows commercial products contributed 14 percent to sales in the third quarter of 2021.

The company remains extremely profitable. Net income was $16.7 billion, an eight percent improvement.

All of the above numbers would have been even better if there hadn’t been exchange rate shifts — and if partners had been more enthusiastic about Microsoft’s more recent licensing deals.

The licensing scheme was announced in September 2020 when Microsoft pitched “A simplified approach and more flexibility to purchasing software licenses in an easy-to-understand way that directly improves license asset management and results in predictable costs.”

The program has toned down perpetual license sales in favor of a “new trading experience” that focuses on term subscriptions for cloud products and makes paying monthly more expensive.

But the scheme has worried some members of Microsoft’s partner community, who fear it could put them on hold over some customer purchases.

Channel-centric analyst firm Canalys has ranked the new program as more beneficial to Microsoft than its partners or customers. The analysts also noted that the change includes significant price increases, and meant it “has drawn considerable ire from partners around the world.”

These partners seem to have vented their anger by not using the new scheme — despite it becoming Microsoft’s default offering in early 2022.

“Our on-premises transactional license revenue in both the office and server businesses was more negatively impacted than expected due to the transition from our open license program to our cloud solution provider program,” CFO Amy Hood reported on Microsoft.

“We’re just taking a little longer to engage this whole community to make sure they can trade the program the way they want,” Hook added. “So I think it’s going to take us longer than we thought. We will continue to see this impact in the fourth quarter.”

Microsoft CEO Satya Nadella agreed, “This change is super good for both partners and customers, and for Microsoft in the long run. So implementation is imminent, but we want to do this because it benefits everyone.”

Right now, some are obviously struggling to see the benefits, and that’s hurting Microsoft’s bottom line — enough to warrant a mention in its quarterly results. But by the same token, it was just a mention alongside otherwise rapid growth, and the magnitude of the impact hasn’t been quantified. ®

About Willie Ash

Check Also

Don’t commit yourself! Here are solid alternatives for Apple’s weaker software

One of the best things about Apple’s Macintosh computers is that they come with a …