Cloud is not about to take over & LA's can be divided!
I am not in total agreement with a couple of views made in this article:
1: Cloud is not suddenly going to become a household name and the only offering by the vendors.
Microsoft’s marketing machine has worked tirelessly to move businesses to a subscription model for the past 10 years and it failed because it could not change the buying behaviour across the numerous complex global cultures at the blink of an eye. Companies around the world prefer to ‘own’ their software licence assets for two main reasons: (1) It is cheaper (in the long run) than subscription (renting) & (2) They own the product and therefore, it has a residual value on the balance sheet. Cloud has also been around for over a decade and is now on its 3rd generation wave – however, the entire software licence industry is not about to move to Cloud. Perpetual software licensing will be around for many years to come, albeit we are seeing a rebalancing of the market share between the different software licence programs on offer.
2: Clarification on ‘Dividing’ a Licence.
I want to elaborate on the point of “dividing” licences and how this ruling relates to other software vendors as this point should have been made clearer by the CJEU in its judgment. The ruling concerns an Oracle “licence”, which would be more appropriately defined as a minimum “block” of 25 CALs. A company that purchased 100 blocks (2500) CALs can sell off those 100 blocks to 100 different customers but it cannot break down the individual licence blocks i.e.: a ‘licence’ cannot be broken down into 5 x 5 user licence blocks. Let’s compare this to a Microsoft Volume LA (Select / Enterprise), in which an LA can also be broken down but only to licence level:
[Example 1]: an LA containing 1000 x Office 2010 PRO can be broken down and sold off in smaller quantities e.g.: 500 + 500; however, you cannot break down / divide at the individual Office 2010 PRO licence level and then sell off as individual components (Word, Excel, PowerPoint, Access etc).
[Example 2]: Windows SBS CALs could be purchased in licence blocks of 5 or 20 CALs. A company may purchase 2 licence blocks, 1 licence block containing 20 CALs + another licence block containing 5 CALs. The ruling requires that you cannot break down the licence block of 20 CALs and sell off to two different customers in smaller quantities such as 10 + 10 CALs; however, you can sell the 2 licence blocks to 2 different customers.
In any case, this court ruling puts a long awaited dent in the FUD (Fear, Uncertainty & Doubt) tactics employed by the software vendors. However, worth noting that Usedsoft's use of a Notary (in part, to hide where the licences came from) was deemed illegal by the German courts and Usedsoft is now also going through insolvency proceedings. There are other secondary software licence suppliers whom adopt more transparent business models that do not rely on the Exhaustion Principle e.g.: www.discount-licensing.com.