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Microsoft slashes Windows XP custom support prices just days before axing public patches

Gregg Keizer | April 17, 2014
Reduces after-retirement support costs for large enterprises as much as 95 percent

Sources familiar with Microsoft's position claimed that the company changed its CSA pricing tune after chief operating officer Kevin Turner returned to Redmond at the beginning of the month from a swing through the sales force, where he got an earful about customers with thousands of XP machines and no chance of making the migration deadline. The decision to drop prices was made shortly after that.

Ullman and Silver corroborated the timeline, saying they began hearing about the price reductions around the first of the month.

Microsoft's decision was the right one, said Ullman.

"This was an enormous change," Ullman said. "It shows a change at the way they look at their customers and might be part of a fresh atmosphere at Microsoft. I don't think it was about a change of heart about pricing, but instead Microsoft being a responsible software provider, stepping up to be responsible, realizing that there were all kinds of reasons why companies haven't upgraded XP, and providing a solution for a product that's there, that's reliable."

Microsoft has made several other moves of late -- all after Satya Nadella was appointed CEO to replace Steve Ballmer -- that signal a different attitude than, say, even three years ago, including shipping a touch-first Office for the iPad before one was ready for Windows 8.1.

"[The earlier CSA pricing] was a bad call," Ullman continued. "But someone said, 'This is wrong and we need to step up and be reasonable.' I see this as Microsoft helping customers migrate at their own pace."

Silver was less impressed. "What people wanted was longer support for Windows XP," he said in an interview. "But there was no way that Microsoft was going to blink on that. There was no way they were going to change the [support retirement] date. So the only thing they could do was lower the price. That way they wouldn't anger too many existing customers who had spent the time and money migrating from XP."

Still, Silver also noted that the winds had shifted in Redmond. "They wouldn't have moved this fast earlier," he said.

Because Microsoft adjusted the cap, not the $200 per-device pricing, the lower prices will benefit larger organizations. Ullman said that the new CSA minimums were 750 PCs, with a minimum payment of $150,000 for a year's worth of support.

Gartner advised companies that had already signed a CSA to go back to Microsoft and ask for a review and renegotiation of their current contract pricing and terms.

Under Microsoft's rules, companies can sign a CSA at any time -- there is no deadline, something Ullman said was very unusual for Microsoft -- and have immediate access to all the critical security updates that have been released since April 8. Payment for the first year of fixes, however, is retroactive, meaning that if two organizations sign a CSA, one today, another in December, the span covered will be from April 8, 2014, to April 8, 2015, for both.


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