Microsoft recently released the retail pricing for the next round of its server upgrades. Most of the news is good: Microsoft hasn’t raised the retail prices of its standard server (now called "Standard Edition") or its advanced server (now called "Enterprise Edition") products. Standard Edition still lists at $999 and includes five client access licenses (CALs), and Enterprise Edition costs four times that and includes 25 CALs. But the big surprise is that if you add Windows Server 2003 to your existing network, you must buy all new CALs. Many people won't find this news surprising. I do, because of a Microsoft statement of several years ago.
When Windows NT 3.1 Server came out, it didn't require CALs. At the time, Microsoft was new to the networking software market. (And before you write me to correct me on this point, admit it: LAN Manager never achieved any notable market share.) Microsoft positioned its rookie OS to offer some attractive advantages over the established network OS (NOS) options, and one of those advantages was user-blind pricing. For $1500, you got a NT 3.1 Server license, CD-ROMs, floppies (yes, you could use floppies to install the OS), a VHS tape that touted the great purchase you’d just made, and enough documentation that you didn’t need bedtime reading for a year. And, you got the right to put as many users on your server as you liked.
Then, about a year later, NT 3.5 appeared. It had a significantly lower price—$700, if I recall correctly—but it also had CALs. Priced at $40 each, these the NT 3.5 CALs started a tradition of ever-increasing complexity in NT licensing. Another year later, NT 3.51 appeared. When talking to Microsoft folks about its release, I asked whether NT 3.51 would require new CALs. I was told that new CALs wouldn’t be necessary because the 3.5-to-3.51 upgrade was a "minor number" upgrade. To clarify, I asked whether we would have to buy new CALs if Microsoft released an NT 3.6, and again, the answer was no—that new CALs wouldn't be necessary until the release of NT 4.0.
So NT 4.0 came along and, as expected, we had to buy more CALs. The per-CAL price dropped to $25, but we soon learned the catch: In addition to the OS CALs, we now had to buy CALs for Microsoft Exchange, BackOffice, Terminal Server Edition (TSE), and other products. The next version of NT was another major number upgrade, to 5.0 (Windows 2000 Server), and so, as expected, we once again had to buy another round of CALs.
But Windows 2003—again, that’s surprising. Windows 2003 is a nice upgrade and I intend to move to it quickly, as I have just a few servers and already know enough about the OS that upgrading will be a snap. However, Windows 2003 is nothing more than NT 5.2, a "minor number" upgrade and, therefore—at least according to what Microsoft told me in 1995—shouldn’t trigger another rash of CAL purchases. I realize, of course, that Microsoft is free to change its mind. But I have to question whether requiring Windows 2003 customers to buy new CALs is a sound business decision.
Traveling to client sites and talking to readers leads me to believe that there's not a lot of upgrading going on. People said they would take their time upgrading from NT 3.51 to NT 4.0, but within 18 months of NT 4.0’s release, about the only reason anyone had stayed with 3.51 was because they were running Winframe, which wasn't available for 4.0 but eventually became TSE. Microsoft claimed that when it released Windows 2000, 60 percent of the NT 4.0 domains would move to Active Directory (AD) within 6 months. But 36 months have passed since the release of Win2K Server, and I wouldn’t be terribly surprised to hear that they still haven’t reached that 60 percent conversion rate. I have large corporate and government clients who shrug their shoulders and say, "There’s just not enough there to sell management—we IT folks would love to do it, but there’s no money for it." Other firms have several 2000-member servers but are leery of AD in its Win2K (read "version 1.0") incarnation, and were waiting for Windows 2003 before rolling out AD. But now they’ll have to re-purchase all of their CALs if they want AD version 1.1.
What, then, can we expect for Windows 2003’s adoption rate? No one can know, of course, but I suspect that whatever revenue Microsoft does generate from selling Windows 2003 CALs will be more than offset by the people who don't feel that they should have to buy new CALs to get a minor upgrade.