ASPs interviewed by ASPNews state that the per-user licensing approach gives them the flexibility they need to develop attractive, cost-effective solutions for a largely untapped marketplace of more than 6 million small- to medium-sized companies. They are less sanguine about what benefits, if any, this new program will bring to the larger customers they want to woo — see related ASPnews.com story, Microsoft ASPs Ponder Enterprise Strategies, Aug 28th 2000.

Realizing Potential

Analysts assessing the small- to medium-sized business marketplace, with its 55 million users, have determined that more than 57 percent of the businesses employing those users would consider using an ASP. Most ASPs see Microsoft's new licensing program as something that will help them develop and deliver services that those organizations will find just too valuable to pass up.

"Microsoft's new licensing makes it easy to implement a complete solution because the software is on a rental basis," says Ben Chou, president of Personable.com, an ASP targeting companies with fewer than 100 employees. "We can show a customer the starting cost for a service and they can budget for it. They get to use the same software, but they don't have to purchase it up front. Moreover, for the $49.95 they pay each month to use, say, Microsoft Office 2000, they get all the maintenance, installation, and support services they need. Compared to the total cost of ownership in a self-supported scenario, that's an average saving of 40 percent."

For ASPs serving medium-sized companies, the new Microsoft licensing opens new opportunities in other dimensions. ASPs like Digex, USinternetworking and Data Return can partner with Value Added Resellers (VAR) to deliver management and infrastructure services without encountering conflicts over who owns the software licenses or the customers.

"The way the new program is set up," says David George, director of business development at Data Return, "an ASP can now offer the customer a choice. We can offer all the infrastructure and management services and hold the licenses. Or, we can offer our management and infrastructure services and let them manage the licenses. That's perfect for customers who want to purchase the software themselves through a VAR channel but who don't want to manage the infrastructure."

Wanting Still More

But despite a feeling that Microsoft has taken a giant stride in the right direction, ASPs agree that the vendor could have done still more. It could have included more products in the new pricing and licensing program — unbundling Office, for instance, or adding Visio, Microsoft Money, and the Microsoft suite of developer tools. It could have offered volume pricing discounts to ASPs akin to those available to larger customer through Microsoft's Select licensing program.

Most of all, it could have given ASPs a little more time to understand and test the per-CPU pricing and licensing model, adopted for back office server products at the last moment in place of per-server licensing. It is going to take time for ASPs to sort that one out, and it will hold up ASPs who would rather spend the time rolling out proven services that can meet customer needs.