Ballmer defends Microsoft licensing

Microsoft CEO Steve Ballmer on Wednesday defended the software maker's controversial licensing plans and its ever-changing consumer strategy.

Ballmer, speaking here at a conference sponsored by market researcher Gartner, acknowledged that Microsoft's recent decision to implement a new software licensing plan has angered some customers. "Sometimes when you clean things up and simplify things, you wind up costing some customers more, and that's problematic," he said.

The licensing plan, announced in May and implemented earlier this month, compels customers to switch to an annuity-based model, in which they annually pay up front for upgrades under a two- or three-year contract known as Software Assurance. This effectively raised volume-licensing fees from 33 percent to 107 percent, according to Gartner.

Despite early resistance, Ballmer said, Microsoft has "seen a very high percentage of customers sign up" for the plan.

Ballmer defended the effort, saying that it smoothes out some of the rough spots of earlier licensing schemes. "We recognize the need to assure (customers) that we are delivering continuous value as opposed to lumpy upgrades. We understand that for some customers it represents a less good value than it did a year ago," he said.

Ballmer said Microsoft constantly reviews its licensing policies. "We are doing a full relook at end-user licensing agreements. We want to make sure we simplify. We have to be very careful to listen to the feedback we get and keep costs constant or reduce them," he said.

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