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Gartner Says Microsoft's New Reimaging Policy Could Produce up to $11 Billion in Revenue
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Stamford, CT, September 25, 2000 — A new revenue opportunity of up to $11 billion this year alone has been discovered by Microsoft executives. The potential revenue would be gained by charging smaller and midsize businesses for the right to reimage their Windows desktops, according to Gartner Group, Inc. (NYSE: IT and ITB).
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The fees apply to the approximately 100 million PCs deployed in smaller and midsize organizations worldwide. Microsoft's policy to treat reimaging as a "pay-extra-privilege" could command up to $11 billion from smaller to midsize Microsoft customers purchasing under Microsoft's "Open" purchasing program.
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Until 11 September, all Microsoft business users were eligible for the reimaging fees. However, pressure during the past six weeks from Gartner and its clients representing many of Microsoft's largest customers persuaded Microsoft executives to relieve a large segment of clients from the new fees. Microsoft's largest clients, those with "Select" or "Enterprise" agreement contracts, are now exempt from the reimaging fee policy. Gartner estimates that this exemption has saved these businesses up to $2.3 billion. |
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"Microsoft's removal of these fees for larger organizations is a positive step. However, we believe that no business, large or small, should be charged for the right to reimage," said Neil MacDonald, Gartner research director. "Gartner clients are incredulous that Microsoft is now charging a fee for a practice that is considered a basic necessity for deploying and supporting Windows desktops in any organization."
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"Microsoft's position is counterproductive in that reimaging enables new versions of Windows to be adopted more quickly," continued MacDonald. "It's like repainting your small apartment and having to pay a fee to the landlord to use a paint roller instead of a paint brush while people repainting larger apartments may use their paint roller for free."
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Reimaging refers to the practice of developing a standard Windows desktop configuration and then copying this image to other Windows desktops within an organization. For example, an organization would use a reimaging process to deploy 500 new Windows desktops to ensure that each desktop looks the same. Reimaging is also used to restore malfunctioning machines to a known working state. Until Microsoft began raising this issue two months ago, reimaging has been viewed as a basic maintenance feature by most Microsoft customers, according to Gartner. |
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"The smaller businesses will bear the brunt of this policy," said Alexa Bona, Gartner research director. "Not only are the smaller customers more numerous, but they also are less likely to have the leverage with Microsoft to affect a policy change or negotiate these fees down. We have developed a list of alternatives for small businesses to use in order to avoid these fees, but our primary advice to these organizations is to pressure Microsoft to change this position for all organizations, regardless of size."
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Additional analysis on the B2B industry will be presented during Gartner's Symposium/ITxpo 2000, October 16-20, 2000, in Lake Buena Vista, Florida. This event is the IT industry's largest and most strategic conference, and it provides business leaders with a look at the future of IT. Some of the speakers at this year's event include Hewlett-Packard's chairman and CEO, Carly Fiorina; Sun Microsystems' chairman and CEO, Scott McNealy; and Microsoft's president and CEO, Steve Ballmer. To register for Gartner's Symposium/ITxpo 2000, please call 1-800-778-1997 or 1-203-316-6757, or go to www.gartner.com.
Members of the media can register by contacting Lisette Kwong at 1-212-320-2330 or lkwong@tsicomm.com.
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About Gartner
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