The Future of Licensing Facing Global, Programmatic and Technological Challenges Jason Kap Senior Director, Worldwide Licensing and Pricing Microsoft Corporation

In The Beginning… One software box equaled one license for one computer Then There Were… More boxes for more licenses for more computers And So, Volume Licensing Was Born…

Licensing What it is Expression of your business model(s) Indicator of how you think about markets and customers What it should not be An identity for your customers A limitation on your thinking about business models Product Licensing Channel Licensing Program Licensing

Volume Licensing Types Perpetual – License use rights are permanent Subscription – License use rights are time-based Annuity – a persistent relationship exists with licensee Transactional – no ongoing relationship exists with licensee UtilityEASubscriptionSubscription OEM/SelectEnterpriseAgreement Perpetual Perpetual TransactionalAnnuity License Types

The Fundamental Customer Challenge SIMPLE Simple to understand Simple to acquire Simple to administer Simple to expand Simple to curtail Simple to cancel FLEXIBLEUsagePriceTimeLanguageGeography OR Simplicity versus Flexibility Customers want licensing that is:

Global Versus Local A further complication Global Customers Sophisticated purchasing arms Strong corporate governance Need multiple languages, delivery locations, support options Need for departmental bill back Local Customers Technically sophisticated, but not contractually so Little legal support Prefer plain language agreements Don’t want to deal with the complexity introduced by multi-lingual, multi- national options

Solutions Be predictable Give customers comfort of knowing your next move and avoid surprises Internalize complexity Customers want the solution and not the details how it is provided Be globally local Build systems and licensing with global and ‘local’ parts

Solution – License Program Models Vision: Create a single program licensing framework across all segments / businesses Eliminate monolithic programs Programs as a series of modular business rules using a library of standardized, reusable building blocks …. HVMS … 5. Select 4. Enterprise EA EAS 1. EA Current Programs Flexible Standard Models Program Elements Price/Discount Related Primary/CoreAdditional Model 1 Model 2 Model 3 Model 4

Software as a Service Services bring new challenges Likely do not fit with traditional software licensing models May not fit traditional sales models May not fit traditional channels / partners May not fit infrastructure May not fit infrastructure Billing models of minutes, hours, or months What happens when an agreement expires

Research customer usage Establish regular forums for customer feedback Plan for the future – policies must last Change is difficult for customers Look at hardware advancements versus software when updating policies Multi-core Virtualization – NEW Emerging Technologies

Self-Managing Dynamic Systems Bob Kelly General Manager, Windows Infrastructure Microsoft

Customer Situation

Greater utilization AutomationSelf-healing Flexible deployment Free up IT spend End to end management ModelsPolicyVirtualization Broad industry support Licensing BenefitsEnablers Self-Managing Dynamic Systems The Promise of Dynamic Systems Initiative

Without virtualization Adding a virtualization layer Opportunity System utilization Legacy support Disaster recovery, availability Flexible workload management Industry Issues Security: Integrity, patching Interoperability Isolated management tools Support and licensing Virtual Machines Applications Operating System Hardware Hardware Virtualization Layer OS APP OS APP OS APP OS APP PhysicalVirtual Self Managing Dynamic Systems

Library with 100 images of Windows 7 Servers running images (1 per server) Announcing: New Server Rights License by “running instances” Current License model Total: 107 Windows Licenses Windows Server R2 Enterprise Edition INCLUDES 4 Instances Current License Model Total: 5 Windows Licenses Total: 5 Windows Licenses New with Windows Server R2 EE: Total: 1 License Total: 1 License Introducing new virtualization licensing across all Windows Server System applications Windows Server 2003 R2 EE Hardware Virtualization Layer WindowsWindows WindowsWindows New License rights: Total: 7 Windows Licenses Total: 7 Windows Licenses

A New Paradigm Self-Managing Dynamic Systems Microsoft as thought leader: Technology Investments Virtual Server Hypervisor System Center virtualization management Industry Support VHD licensing Fostering interoperability Licensing Innovation

© 2005 Microsoft Corporation. All rights reserved. This presentation is for informational purposes only. Microsoft makes no warranties, express or implied, in this summary.