Step-up licenses, introduced in 2003 as one-year promotional offers for customers with upgrade rights who wanted to migrate from standard to premium editions of many Microsoft servers and applications, have been made a permanent part of Microsoft’s licensing offerings. The company has also expanded the list of products for which step-up licenses will be available.

Why Step-Up Licenses Are Required

Step-up licenses were introduced to handle the sometimes significant changes between product editions when a new version of an application is released. Customers who found the features of a less-expensive standard edition to be sufficient with one version have sometimes found that the features they want are available only in a premium (e.g., Professional or Enterprise) edition of the successor product. Unfortunately, although Software Assurance (SA), through which customers purchase the right to upgrade, gives customers an upgrade to the next version, such as from Project Standard 2002 to Project Standard 2003, it does not permit customers to upgrade from standard to premium editions, such as from Project Standard 2002 to Project Professional 2003.

However (continuing with the Project example), Project client software changed significantly between the 2002 and the 2003 versions. In particular, while both the Standard and Professional Editions of Project 2002 could be used with Project Server 2002, Project Standard 2003 does not interact with Project Server 2003. Customers who need client software that will interoperate with Project Server 2003 must have Project Professional 2003. Without a way to upgrade to a different edition, Project Standard customers with SA who wanted to continue to access Project Server after an upgrade would have been required to purchase Project 2003 Professional separately.

Similarly, until Office 2003, the differences between Office editions were primarily a matter of which Office components they contained—for instance, the main difference between Office Standard and Professional was that the latter edition contained the Access database. But with Office 2003, the differences between editions became more complex: not only does the Professional Edition (renamed Professional Enterprise Edition for volume licensing customers) contain additional applications, such as Access and InfoPath, but its component applications have more advanced XML and rights management features.

How Step-Up Licenses Work

Step-ups offer a license to migrate from a standard to a premium edition of an application for the difference in price between the standard edition with SA and the premium edition with SA. In general, step-up pricing neither rewards nor penalizes customers making this migration: they don’t save money by purchasing a standard edition and then a step-up to a premium edition, nor is this migration path more expensive than purchasing a premium edition in the first place.

The step-up can be paid in installments over the customer’s Enterprise Agreement, Select License agreement, or Open License Value agreement. Step-up licenses are not available in the Open Volume and Open Business volume license plans.

Step-ups were originally announced for Office, Project, and Windows Server. Microsoft has now expanded the list to include BizTalk Server, Commerce Server, Content Management Server, Exchange Server, Internet Security and Acceleration (ISA) Server, Microsoft CRM, Speech Server, SQL Server, and Visio, and will add Small Business Server to the list in fall 2004.

More information about step-up licenses can be found in "Step-Up Licenses Offer Product Upgrades for SA Customers" on page 22 of the Sept. 2003 Update.

Licensing briefs that describe step-ups, including product eligibility, payment terms, and other details, can be found at www.microsoft.com/licensing/resources/volbrief.mspx.

For a list of the most recent Directions on Microsoft coverage of licensing topics, see the Recent Changes to Microsoft Licensing page.