The new policy, which comes into force from 1 October, 2001, will mean only users who purchase the Upgrade Advantage System (UAS) will be entitled to software upgrades.
"This policy is designed for simplicity," said Duncan Read, product services group manager. "There are [currently] an alphabet soup of upgrades and it can be frustrating for customers to navigate upgrades."
Details of Microsoft licensing agreements and subscription 'offers' are contained in all newly purchased software packages.
The new licensing policy does not affect consumers who will, at least for the time being, still be entitled to upgrades, it is specifically targeted at SMEs (small and medium-sized enterprises).
Full licences and full software packages will now have to be purchased to get the latest version of software.
But even for those users who do subscribe to the UAS, the upgrade offer is limited to a two-year period from the date the software is purchased.
"This is a subscription-based service and we are not forcing it on users," said Read.
"It is obviously cheaper for SMEs to subscribe to the licensing agreement than buy new software," said Daniel Bailey, senior account manager at Wstore, the company responsible for Microsoft's licensing agreements.
But whether or not SMEs choose to subscribe to the upgrade agreement, they will still have to reach that bit deeper into their pockets to keep up with new software releases.