Ballmer Admits Windows Licensing “Gotchas”

Microsoft puts “gotchas” in the fine print of its licences to get money out of users – and there are no plans to make those licences any simpler, Steve Ballmer told customers in London today.

One user asked the Microsoft CEO to “simplify” licences, complaining that the The fine print is “challenging”, leading to unecessary work and avoidable charges.

“When we are audited, they focus on trying to trip us up on the fine print,” the user said, at a customer event held in Microsoft’s London offices to promote Windows 7, Windows Server 2008 R2 and forthcoming versions of Microsoft applications such as Office 2010.

The question got a round of applause from the audience of customers, but Ballmer would not promise to get rid of any fine print.

“I don’t anticipate a big round of simplification,” Ballmer said. “Whenever you simplify you get rid of something.”

He admitted that some of the caveats in the fine print “gotchas” in licences are “deliberate”. Users wanting simplification are actually asking for price cuts, while Microsoft shareholders would prefer that any simplification kept prices higher, he said (especially as Microsoft revenues have declined of late).

However, most options in the licences are there because “someone has used them to reduce their costs,” he said – and removing any of them would upset some users.

For instance, SQL Server is available on a per-processor basis, or on a per-server CALS licence. “We could simplify that by eliminating one option,” he said, but customers with large chains of small offices like the per-processor licensing, and a data-centre customer with big servers would prefer CALS, he said.

Six years ago, Microsoft did try to simplify its licence arrangements, said Ballmer, “And our customer satisfaction numbers plummetted for two years.”

“I’m not trying to say we are saints,” he said. “But we are driven by what customers want, not by an ideal of simplification.”

Ballmer’s talk also repeated a previous message about a “new efficiency” in IT, partly driven by the recession and promoted a new generation of products Microsoft is producing in what he called “a fun year.”

“Nothing is better than introducing new products,” he said.

Users such as the Government of the Isle of Man are already saving up to £120 per year using the beta version of Windows 7, in reduced management and support costs, Ballmer claimed. claiming to be saving £100 per desktop per year.

Ballmer promised more cloud computing initiatives, but warned that client devices would continue to be important: “No-one believes in thin clients,” he said. “Everyone believes in the need for local storage and local computation.”

Asked about compatibiity issues between Microsoft’s Hyper-V and the virtualisation market leader, VMware, Ballmer queried why anyone would spend money on VMware when Microsoft can give something “as good or better, at much lower cost.”

He also promised that gestural computing interfaces – premiering on the Xbox – would come to office equipment in 2011 – although it will have to be on large screens working at a distance, at first.

Ballmer also suggested that education should be given government stimulus funding to enable young people to gain experience on the computing systems they would meet in the real world.