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Technology Stocks : How high will Microsoft fly?
MSFT 476.080.0%3:59 PM EST
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To: Stephen O who wrote (48132)7/25/2000 1:42:34 AM
From: rudedog  Read Replies (1) of 74651
 
Stephen - Assuming your company has both a select agreement and a platinum support agreement, you have no additional costs from a licensing standpoint. That's why big companies do those agreements.

The money paid on those agreements is what goes into the "unearned income" line on the MSFT earnings. As the agreement runs its course, MSFT takes the money paid for the select agreement and applies it to real income. So in that sense you are paying for the licenses, just in a more economical and flexible way which matches the way your company does business.

Erasing the hard drives is how your company maintains a constant number of licenses active at any given time.

This aspect of MSFT business has received little play in the recent discussions about the DOJ etc. Your point about the "loss in revenue" due to the agreements which let you use the existing licenses is correct - but the other side of the coin is that users are unlikely to switch OS or office suites when they already have a long term agreement which gives them those products essentially free unless they increase the number of users. The assumption is that any new systems will also use MSFT software since it becomes the "standard", and that this is a good tradeoff for the incremental license revenue.
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