1. The Future of LicensingFacing Global, Programmatic and Technological Challenges Jason Kap Senior Director, Worldwide Licensing and Pricing Microsoft Corporation

2. In The Beginning… Then There Were… And So, Volume Licensing Was Born… One software box equaled one license for one computer More boxes for more licenses for more computers

3. Licensing What it is • Expression of your business model(s) • Indicator of how you think about markets and customers What it should not be • An identity for your customers • A limitation on your thinking about business models Channel Licensing Program Licensing Product Licensing

4. License Types Annuity Transactional Perpetual Enterprise Agreement OEM/ Select Subscription EA Subscription Utility Volume Licensing Types • Perpetual – License use rights are permanent • Subscription – License use rights are time-based • Annuity – a persistent relationship exists with licensee • Transactional – no ongoing relationship exists with licensee

5. SIMPLE Simple to understand Simple to acquire Simple to administer Simple to expand Simple to curtail Simple to cancel FLEXIBLE Usage Price Time Language Geography The Fundamental Customer Challenge Customers want licensing that is: OR Simplicity versus Flexibility

6. Global Customers Sophisticated purchasing arms Strong corporate governance Need multiple languages, delivery locations, support options Need for departmental bill back Local Customers Technically sophisticated, but not contractually so Little legal support Prefer plain language agreements Don’t want to deal with the complexity introduced by multi-lingual, multi-national options Global Versus LocalA further complication

7. Solutions • Be predictable • Give customers comfort of knowing your next move and avoid surprises • Internalize complexity • Customers want the solution and not the details how it is provided • Be globally local • Build systems and licensing with global and ‘local’ parts

8. Solution – License Program Models Vision: • Create a single program licensing framework across all segments / businesses • Eliminate monolithic programs • Programs as a series of modular business rules using a library of standardized, reusable building blocks Current Programs Program Elements Flexible Standard Models Primary/Core Price/Discount Related Additional Model 1 1. EA 2. EAS Model 2 3. EA 200 4. Enterprise 100 Model 3 5. Select … Model 4 …. HVMS

9. Software as a Service • Services bring new challenges • Likely do not fit with traditional software licensing models • May not fit traditional sales models • May not fit traditional channels / partners • May not fit infrastructure • Billing models of minutes, hours, or months • What happens when an agreement expires

10. Emerging Technologies • Research customer usage • Establish regular forums for customer feedback • Plan for the future – policies must last • Change is difficult for customers • Look at hardware advancements versus software when updating policies • Multi-core • Virtualization – NEW

11. Self-Managing Dynamic Systems Bob Kelly General Manager, Windows Infrastructure Microsoft

12. Customer Situation

13. Greater utilization Automation Self-healing Flexible deployment Free up IT spend End to end management Models Policy Virtualization Broad industry support Licensing Self-Managing Dynamic Systems The Promise of Dynamic Systems Initiative Benefits Enablers

14. APP APP APP APP OS OS OS OS Virtualization Layer Applications Operating System Operating System Hardware Hardware Physical Virtual Self Managing Dynamic Systems Virtual Machines Adding a virtualization layer Without virtualization Opportunity • System utilization • Legacy support • Disaster recovery, availability • Flexible workload management Industry Issues • Security: Integrity, patching • Interoperability • Isolated management tools • Support and licensing

15. Windows Windows Windows Windows Virtualization Layer Windows Server 2003 R2 EE Hardware Announcing: New Server Rights License by “running instances” Windows Server R2 Enterprise Edition INCLUDES 4 Instances Library with 100 images of Windows 7Servers running images (1 per server) Current License model • Total: 107 Windows Licenses Current License Model • Total: 5 Windows Licenses New License rights: • Total: 7 Windows Licenses New with Windows Server R2 EE: • Total: 1 License Introducing new virtualization licensing across all Windows Server System applications

16. A New Paradigm Self-Managing Dynamic Systems Microsoft as thought leader: • Technology Investments • Virtual Server • Hypervisor • System Center virtualization management • Industry Support • VHD licensing • Fostering interoperability • Licensing Innovation

17. © 2005 Microsoft Corporation. All rights reserved. This presentation is for informational purposes only. Microsoft makes no warranties, express or implied, in this summary.