Microsoft gooses Windows XP's custom support prices as deadline nears

Microsoft is wielding the big stick of dramatically higher custom support costs as it pushes enterprises to abandon the 11-year-old Windows XP, an analyst said today.
Custom support plans, which Microsoft negotiates on a company-by-company basis, provide critical security updates for an operating system that's officially been declared dead. Windows XP, which still powers about 43% of the world's Windows PCs, is slated for support retirement on April 8, 2014. That leaves 410 days from today for XP users to move on.

According to Michael Silver and Stephen Kleynhans, a pair of Gartner analysts who published a report on XP custom support last month, some companies won't meet the deadline. "Many will not have Windows XP totally eliminated before support ends," Silver and Kleynhans wrote, echoing earlier estimates by Silver that between 10% and 15% of enterprise PCs will still be running XP when Microsoft pulls the plug.
However, Microsoft offers a failsafe of sorts -- "Custom Support" -- that lets companies pay for security patches beyond the normal support lifespan.

But Silver and Kleynhans said that Microsoft has quoted significantly higher prices for Custom Support than in the past.
For some time, Microsoft capped custom support at $200,000 for the first year, payable quarterly so that if a firm finished its migration in less than a year, it would pay only for support through the end of that quarter. In 2006, Microsoft switched to per-device pricing, with a floor of $200,000 and a ceiling of $500,000. Four years later, in 2010, Microsoft modified pricing yet again by capping it at $200,000 for the first year if the corporation had signed up for Software Assurance, the annuity-like program that guarantees companies access to the newest version of a product.

Those prices got tossed out the window, said Silver in an interview today. Microsoft has returned to a per-device model -- $200 has been typical -- and reinstituted floor and ceiling amounts. But those amounts for the first year are closer to what Microsoft was previously charging for the third year of support.
"It's certainly not pretty," said Silver of the custom support quotes for XP, which have ranged from $600,000 to $5 million for the first year.

The higher prices put to rest speculation by some experts last year that Microsoft, faced with enormous numbers of XP PCs still in use next year, would have no choice but to extend free support.
An IT manager, who wished to remain anonymous because he was not authorized to speak on the matter, told Computerworld that Microsoft had quoted his company $1 million for the first year of custom support to cover 5,000 Windows XP machines, $2 million for the second year, and $5 million for the third.
Silver pointed out that the $1 million fit with what he'd heard from other organizations of Microsoft charging $200 per PC for the first year of post-retirement support.
"It is hard to fault Microsoft for wanting to end support for its older products and migrate users onto newer versions that provide a better experience, and potentially revenue for Microsoft," said Silver and Kleynhans in their report.