OnLine Services & Volume Licensing Keys 2.0

Yik Khong Song

Agenda

Online Services:• Overview of Online Services in VL• Online Services Licensing and Ordering Basics• What’s changing in the Feb07?

Volume Licensing Keys 2.0• Brief update/refresher

Executive Summary

Excluding the ad-funded revenues, Microsoft’s business-focused SaaS is a $3B-$5B potential business opportunity by 2011 with high double digit growth. Mid-market is the sweet spot for selling most online services

MS is not fully leveraging its biggest vehicle (Volume Licensing) for selling online services to commercial organizations

• Only 16% ($38 MM) of the $236 MM FY ‘06 MS-Hosted SaaS revenue is flowing through VL with over half of it going through EA

• Less than 1% of FY ‘06 MS-Hosted SaaS revenue went through Open Value, the primary licensing program for mid-market customers

Key barriers to selling services through VL include • VL program and licensing model limitations • Channel model that is not optimized to sell services• Lack of a supporting IT infrastructure

Online Services in Volume Licensing: Overview

Online Services are a recent offering through Volume Licensing

• Applications Hosted at Microsoft Data Centers

• Client bits may or may not be installed locally

• Services are priced monthly and billed annually for the term of the agreement

Shift from software-only to software-plus-services provides up-sell/cross sell revenue opportunities for Microsoft and its partners

“Software as a service (SaaS) will constitute 25 percent of new business software delivered by 2011” : Gartner report (Oct 2006)*

* Gartner defines SaaS by three chief characteristics: It is hosted by the provider or a provider's partner; it is used in a one-to-many model, so that every company accessing it is using the same code base and data model; and it is purchased on a pay-for-use basis, or as a subscription based on usage.

Customer Value Proposition Partner Business Proposition

The Value Proposition Of Online Services

Minimal IT management and deployment

Low up-front cost

Speed to Market

Increase Deal Size

Recurring Revenue

Shorter Sales Cycle

Online Services Offerings in Volume Licensing

Microsoft Office Live Meeting Microsoft Office Live Communications Server Public IM

Connectivity (PIC) MS Exchange Hosted Services (Filtering, Archive, Continuity,

Encryption) Office Groove Enterprise Services (Launched in October 2006)

Security

Antigen (to be renamed under the Forefront security products)Antigen for Exchange, Antigen for SMTP Gateways, Antigen Spam

Manager (to be renamed as Forefront Security for Exchange Server in Dec. 2006 pricelist)

Messaging Security Suite (Antigen for Exchange, Antigen for SMTP Gateways and Antigen Spam Manager): to be renamed as Forefront Security for Exchange Server in December 2006 pricelist

Antigen Enterprise Manager (to be renamed Forefront Server Security Management Console in July 2007 pricelist)

Antigen for SharePoint (to be renamed as Forefront Security for SharePoint in Dec. 2006 pricelist)

Antigen Instant Messaging (to be renamed as Forefront Security for Office Communications Server July 2007 pricelist)

Microsoft MapPoint Web Services Standard and Professional MSN Encarta Premium and Academic Microsoft Learning Solutions

Communication and Collaboration

Others

Online Services: Availability in VL Programs

Available through most VL programs*• Enterprise Agreement • Enterprise Agreement Subscription• Select • Open Value • Campus Agreement• School Agreement

Not available in Open Business or Open Volume

*Antigen and Exchange Hosted Services available through SPLA and HVS. Live Meeting in SPLA: January 2007. The traditional VL programs mentioned above are not the licensing option for Microsoft’s hosting partners

Online Services: License Model

Services Subscription License (SSL)

A SSL is generally required to enable the functionality of a service across your entire organization. It is not required for all online services.

For e.g., Antigen Enterprise Manager Services SL for each server running the online service

Add-on Subscription License (Add-on SL)

An Add-on SL is generally required to enhance or “add-on to” the functionality of a service across your entire organization. It is designed to scale costs as an organization consumes more services

For e.g., Extra Storage Add-on SL for Microsoft Exchange Hosted Archive, Meeting Room Add-on SL

User Subscription License (USL)

A USL is generally required to enable the functionality of a service for a particular named user.

For e.g., User SL for MS Exchange Hosted Archive

Device Subscription License (DSL)

A DSL is generally required to enable the functionality of a service for a particular device.

For e.g., Device SL for Antigen for Exchange

SSL

ServiceSubscription

License

AddSSL

Add-on ServiceSubscription

License

USL

User SubscriptionLicense

DSL

Device SubscriptionLicense

The VL Product Use Rights (PUR) specifies which license is required

Ordering / Payment

• Online services are billed annually and priced monthly

• When purchasing, the quantity ordered should represent number of users or devices, and NOT the number of user months

• If purchased in the middle of an agreement year, coverage and pricing are prorated monthly. Subscription term is equal to the remaining term of your agreement

• For mid-term EA orders, the proration dynamics are the same. Customers must order before they want to use a service(s) and NOT include them in true-up orders

• Campus and School Program rules do not permit monthly proration. Business Desk amendment available

• Payment is NOT prorated. Payments are made annually

Payment Options

Pay for 33 Months

Initial order with 33 Months remainingUpfront

Annual

Pay for 9 Months

12 Months

Initial order with 33 Months remaining

12 Months

Coverage is monthly pro-rated, but payment is NOT monthly.

Customer committed to paying for services for the full 33 remaining months on the agreement

Service Adjustments

Pay for 9 Months

12 Months

Initial order with 33 Months remaining

12 Months

Add additional licenses with 15 Months remaining

12 Months

3Months

• No True-down or cancellation • In subscription programs (e.g., OV Subscription, EA Subscription), customer can

reduce order prior to the end of term: at each annual order within that subscription term

• Place an order to add more licenses

Quoting Customers Estimated Retail Pricing

• On the Microsoft price list, the Estimated Retail Price column rounds up to the nearest dollar

• Because Online Services products are priced monthly, many of the product prices (Antigen etc.) are fractions of a dollar, which shows up on the price list as an ERP of $1

• Please DO NOT use the ERP from the price list for online services products – you could be quoting an ERP that could be 3 or more times the actual ERP

OLS Model OverviewOrder Process

Services should be ordered through the standard direct partner ordering tools.

Select/EA

Contact preferred reseller and place order

Download Antigen Products from MVLS site or Monthly VL Media Kit

Contact preferred reseller and place order

Receive CD of your licensed Antigen product (5-10 days)

Receive e-mail confirmation of Subscription License

Open

Project Goals 1.65

Upgrade the VL infrastructure to scale and handle enterprise Cal and the Office 12 launch.

Build flexibility in the OLS architecture to allow future services (within known identifiable models) to integrate quickly into the VL infrastructure.

Reduce pain of manual reconciliation steps between order placement and order activation for Services

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Project Scope 1.65

Automate service activation

Streamline the flow between ordering and provisioning

Enable a seamless flow between trial and purchase order

Enable a consistent service activation experience for our customers across all services sold by Microsoft via volume licensing

Resolve MSU billing issue for Enterprise Subscription

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OLS Model OverviewOrder Process

Services should be ordered through the standard direct partner ordering tools.

Select/EA

Contact preferred reseller and place order

Download Antigen Products from MVLS site or Monthly VL Media Kit

Contact preferred reseller and place order

Receive CD of your licensed Antigen product (5-10 days)

Receive e-mail confirmation of Subscription License

Open

Volume Licensing Activation

Launch dynamicsPricing:

• Oct06: Enterprise CAL skus can be found in the pricelist• Nov06: Office 2007, Vista skus and corresponding step-up SKUs can be found

in the pricelistProduct:

• Media:– Office 2007 and Vista media will be available in the Jan07 VL kits

• Download:– Office 2007 and Vista will be available via download from MVLS approximately mid Nov06– The products can also be available via the www.microsoft.com site

Vista media:• The media that will be in the VL kit is the Windows Business version. To obtain Windows

Enterprise, customer will need to request via the SAB process

Windows Ultimate: • It is the first operating system that combines all of the advanced infrastructure features of

a business-focused operating system, all of the management and efficiency features of a mobility-focused operating system, and all of the digital entertainment features of a consumer-focused operating system.

• When customers activate their SA Windows Vista Ultimate benefit, they will be shipped the Welcome Kit for Windows Vista Ultimate which will include the media as well as one product activation key. Customers are also entitled to subscription kits based on their agreement.

Volume Activation Options

MAKKMS

Proxy Individual

PurposeCentrally managed activations of multiple PCs

Per machine activationCentrally managed activations of multiple PCs

ActivationsOne time; No re-activation required

One time; No re-activation required

Re-activation at least every 180 days

PC environmentPCs may/may not connect to the Internet

PCs usually connect to Internet

Managed PCs that regularly connect to corporate networks

How PCs activateOne connection to Microsoft to activate multiple PCs

Each PC connects to Microsoft to activate

Each PC connects to company network to activate/re-activate

Reduced Functionality Mode (RFM)

RFM entered when Windows has not been activated within 30 day grace period.

This can happen when:

• Machines have failed to activate against internal KMS or Microsoft

• Significant hardware changes which require re-activation

• KMS activated PC fails to re-connect to KMS within 180 days

Failure to pass Genuine validation Reduced functionality state Allows browser access for one hour per login Options to activate system by phone or internet, or type in a valid product

key

Licensing Partners Microsoft Operations

Key Summary

Understand the policies/procedures associated with OnLine Services model

Support to licensing customers from VLK deployment standpoint

Engaging the Licensing partners on the finalized 1.65 version of OLS changes

Continue to collaborate with Licensing partners on the understanding of policies/procedures of OnLine Services model

Thank You

Microsoft provides this material solely for informational and marketing purposes.  Customers should refer to their agreements for a full understanding of their rights and obligations under Microsoft’s Volume Licensing programs. Microsoft software is licensed, not sold.  The value and benefit gained through use of Microsoft software and services may vary by customer.  Customers with questions about differences between this material and the agreements should contact their reseller or Microsoft account manager.

© 2006 Microsoft Corporation.  All rights reserved.  Microsoft is a registered trademark of Microsoft Corporation in the United States and/or other

countries.