Microsoft Corp.'s announcement that it would begin renting Windows and Office 2007 left many initially euphoric on the notion that they wouldn't have to shell out several hundred dollars for Office anymore, and then disappointed when it became clear that for most of us that wouldn't be the case.
Some things are clearly changing, though. Here's the real deal, in FAQ form:
In simple terms, what are Microsoft's new Rental Rights?
This is a new one-time license that costs $32 for the Pro versions of Windows XP, Vista or 7, $64 for Office 2007 Standard and $83 for Office Professional Plus. Microsoft is offering a 30% discount on those prices until the end of June.
Sounds like a sweet deal for me as a consumer or small business owner. Is it?
Not exactly. First of all, Microsoft is not offering this straight to customers as a Web download or as a new box you'd see on Best Buy shelves. Rental Rights can only be purchased by Microsoft's army of channel partners, in particular: Internet cafes, executive business centers, airport or hotel kiosks, and computer leasing companies, for example
This makes it legal for them to charge or give away access to a leased Windows PC to customers. The OEM copy of Windows that was pre-installed on the PC was not sufficient.
Office 2007 and Publisher 2007 are a different matter. Since neither comes pre-installed on PCs for free, partners would still have to buy a volume license for Office 2007 and/or Publisher 2007 first, a Microsoft spokeswoman confirmed, before they could buy Rental Rights and then offer Office 2007 to end users.
That volume license -- Open, Select, or Select Plus -- is still going to start at about $350 per copy of Office. That makes the total cost for Office about $400.
So if I run a coffee shop or small hotel that lets guests use my PC for free, I would still need to buy Rental Rights?
Technically, yes, but Microsoft isn't likely to go after you and other mom 'n pop shops. Rental Rights is aimed primarily at companies such as national PC leasing company SmartSource, FedEx Office (formerly Kinko's), airport business center operator Regus, and their many smaller competitors.
Regus Americas vice-president of marketing Rebecca Tann said that Microsoft enabling them to lease software to customers was a "great" thing.
"A large portion of our client base are entrepreneurs and small business owners, and it would seem that this [renting] would be a popular option among these type companies, many of [which] are trying to control expenses and may not be able to afford traditional software licenses," Tann said in an e-mail.
So, if Rental Rights is a second license, why is this a good deal?
Before this, companies renting out Windows PCs or Office 2007 (if they were big and law-abiding) bought Service Provider Licensing Agreements (SPLA) from Microsoft. SPLAs are more expensive and complicated than Rental Rights, says Paul DeGroot, an analyst with the independent firm Directions on Microsoft.
Of course, many companies that were either too small or didn't consider themselves a Microsoft partner simply skipped the SPLA, figuring that they already were paying Microsoft once for the software. In Microsoft's eyes, they were "not in compliance," which is its way of saying you're a pirate.
Rental Rights is a compromise designed to encourage smaller partners to become legal without busting their bank account, DeGroot says.
How might I, as a consumer or small business owner, benefit?
FedEx Office might lower the per-minute price to create your Christmas cards via Microsoft Publisher, or print out a PowerPoint presentation. Temporary office operators may be able to start charging customers for hourly PC usage rather than monthly rates, or come up with more creative pricing schemes.
Smaller companies that didn't pay the SPLA and thus hesitated to charge for access to Windows or Office may now be emboldened to do so. That could mean coffee shops or hotels might stop letting you surf the Web or print out your plane tickets for free.
Is this a defensive play against free productivity apps and cloud computing?
Yes, in the sense that it may win back some revenue from customers who have already switched most of their word processing and spreadsheet-jockeying to a free Office alternative, such as a small business owner who needs to create a PowerPoint once a year, or a consumer who wants to create a one-off newsletter with Publisher. It could also help win some revenue from corporations who were planning on displacing Office with Google Docs for its temp workers.
DeGroot said this isn't Microsoft's chief weapon against Google Docs and OpenOffice.org. That's what the free, ad-supported Office Web Applications is supposed to be.
I'm considering this for a large corporation. Can I rent software from Microsoft rather than buy it?
Yes, if, for instance, you are leasing a bunch of PCs for temporary workers during holiday or tax season. In that case, renting Windows or Office via a PC leasing firm rather than buying a permanent volume license could help companies "stay low to ground on their upfront expenses," DeGroot said.
If you've got temporary workers on PCs you already own, you can still lease Windows, Office and even server software like Exchange and SharePoint, just through a different program. Microsoft actually pushed this heavily last year, slashing lease prices by as much as 26% depending on the app.
This was done to snag cash-strapped companies that were forgoing upgrades and dumping their software maintenance and support contracts.