OnLine Services & Volume Licensing Keys 2.0 Yik Khong Song

Agenda  Online Services: Overview of Online Services in VL Online Services Licensing and Ordering Basics What’s changing in the Feb07?  Volume Licensing Keys 2.0 Brief update/refresher

Executive Summary  Excluding the ad-funded revenues, Microsoft’s business-focused SaaS is a $3B-$5B potential business opportunity by 2011 with high double digit growth. Mid-market is the sweet spot for selling most online services  MS is not fully leveraging its biggest vehicle (Volume Licensing) for selling online services to commercial organizations Only 16% ($38 MM) of the $236 MM FY ‘06 MS-Hosted SaaS revenue is flowing through VL with over half of it going through EA Less than 1% of FY ‘06 MS-Hosted SaaS revenue went through Open Value, the primary licensing program for mid-market customers  Key barriers to selling services through VL include VL program and licensing model limitations Channel model that is not optimized to sell services Lack of a supporting IT infrastructure

Online Services in Volume Licensing: Overview Online Services are a recent offering through Volume Licensing Applications Hosted at Microsoft Data Centers Client bits may or may not be installed locally Services are priced monthly and billed annually for the term of the agreement Shift from software-only to software-plus-services provides up-sell/cross sell revenue opportunities for Microsoft and its partners “Software as a service (SaaS) will constitute 25 percent of new business software delivered by 2011” : Gartner report (Oct 2006)* * Gartner defines SaaS by three chief characteristics: It is hosted by the provider or a provider's partner; it is used in a one- to-many model, so that every company accessing it is using the same code base and data model; and it is purchased on a pay-for-use basis, or as a subscription based on usage.

Customer Value PropositionPartner Business Proposition The Value Proposition Of Online Services Minimal IT management and deployment Low up-front cost Speed to Market Increase Deal Size Recurring Revenue Shorter Sales Cycle

Online Services Offerings in Volume Licensing  Microsoft Office Live Meeting  Microsoft Office Live Communications Server Public IM Connectivity (PIC)  MS Exchange Hosted Services (Filtering, Archive, Continuity, Encryption)  Office Groove Enterprise Services (Launched in October 2006)  Microsoft Office Live Meeting  Microsoft Office Live Communications Server Public IM Connectivity (PIC)  MS Exchange Hosted Services (Filtering, Archive, Continuity, Encryption)  Office Groove Enterprise Services (Launched in October 2006) Security  Antigen (to be renamed under the Forefront security products)  Antigen for Exchange, Antigen for SMTP Gateways, Antigen Spam Manager (to be renamed as Forefront Security for Exchange Server in Dec pricelist)  Messaging Security Suite (Antigen for Exchange, Antigen for SMTP Gateways and Antigen Spam Manager): to be renamed as Forefront Security for Exchange Server in December 2006 pricelist  Antigen Enterprise Manager (to be renamed Forefront Server Security Management Console in July 2007 pricelist)  Antigen for SharePoint (to be renamed as Forefront Security for SharePoint in Dec pricelist)  Antigen Instant Messaging (to be renamed as Forefront Security for Office Communications Server July 2007 pricelist)  Antigen (to be renamed under the Forefront security products)  Antigen for Exchange, Antigen for SMTP Gateways, Antigen Spam Manager (to be renamed as Forefront Security for Exchange Server in Dec pricelist)  Messaging Security Suite (Antigen for Exchange, Antigen for SMTP Gateways and Antigen Spam Manager): to be renamed as Forefront Security for Exchange Server in December 2006 pricelist  Antigen Enterprise Manager (to be renamed Forefront Server Security Management Console in July 2007 pricelist)  Antigen for SharePoint (to be renamed as Forefront Security for SharePoint in Dec pricelist)  Antigen Instant Messaging (to be renamed as Forefront Security for Office Communications Server July 2007 pricelist)  Microsoft MapPoint Web Services Standard and Professional  MSN Encarta Premium and Academic  Microsoft Learning Solutions  Microsoft MapPoint Web Services Standard and Professional  MSN Encarta Premium and Academic  Microsoft Learning Solutions Communication and Collaboration Others

Online Services: Availability in VL Programs  Available through most VL programs* Enterprise Agreement Enterprise Agreement Subscription Select Open Value Campus Agreement School Agreement  Not available in Open Business or Open Volume *Antigen and Exchange Hosted Services available through SPLA and HVS. Live Meeting in SPLA: January The traditional VL programs mentioned above are not the licensing option for Microsoft’s hosting partners

Online Services: License Model Services Subscription License (SSL) A SSL is generally required to enable the functionality of a service across your entire organization. It is not required for all online services. For e.g., Antigen Enterprise Manager Services SL for each server running the online service Add-on Subscription License (Add-on SL) An Add-on SL is generally required to enhance or “add-on to” the functionality of a service across your entire organization. It is designed to scale costs as an organization consumes more services For e.g., Extra Storage Add-on SL for Microsoft Exchange Hosted Archive, Meeting Room Add-on SL User Subscription License (USL) A USL is generally required to enable the functionality of a service for a particular named user. For e.g., User SL for MS Exchange Hosted Archive Device Subscription License (DSL) A DSL is generally required to enable the functionality of a service for a particular device. For e.g., Device SL for Antigen for Exchange SSL Service Subscription License Add SSL Add-on Service Subscription License USL User Subscription License DSL Device Subscription License The VL Product Use Rights (PUR) specifies which license is required

Ordering / Payment Online services are billed annually and priced monthly When purchasing, the quantity ordered should represent number of users or devices, and NOT the number of user months If purchased in the middle of an agreement year, coverage and pricing are prorated monthly. Subscription term is equal to the remaining term of your agreement For mid-term EA orders, the proration dynamics are the same. Customers must order before they want to use a service(s) and NOT include them in true-up orders Campus and School Program rules do not permit monthly proration. Business Desk amendment available Payment is NOT prorated. Payments are made annually

Payment Options Pay for 33 Months Initial order with 33 Months remaining Upfront Annual Pay for 9 Months 12 Months Initial order with 33 Months remaining 12 Months Coverage is monthly pro-rated, but payment is NOT monthly. Customer committed to paying for services for the full 33 remaining months on the agreement

Service Adjustments Pay for 9 Months 12 Months Initial order with 33 Months remaining 12 Months Add additional licenses with 15 Months remaining 12 Months 3 Months No True-down or cancellation In subscription programs (e.g., OV Subscription, EA Subscription), customer can reduce order prior to the end of term: at each annual order within that subscription term Place an order to add more licenses

Quoting Customers Estimated Retail Pricing On the Microsoft price list, the Estimated Retail Price column rounds up to the nearest dollar Because Online Services products are priced monthly, many of the product prices (Antigen etc.) are fractions of a dollar, which shows up on the price list as an ERP of $1 Please DO NOT use the ERP from the price list for online services products – you could be quoting an ERP that could be 3 or more times the actual ERP

OLS Model Overview Order Process Services should be ordered through the standard direct partner ordering tools. Select/EA Contact preferred reseller and place order Download Antigen Products from MVLS site or Monthly VL Media Kit Contact preferred reseller and place order Receive CD of your licensed Antigen product (5-10 days) Receive confirmation of Subscription License Open

Project Goals 1.65  Upgrade the VL infrastructure to scale and handle enterprise Cal and the Office 12 launch.  Build flexibility in the OLS architecture to allow future services (within known identifiable models) to integrate quickly into the VL infrastructure.  Reduce pain of manual reconciliation steps between order placement and order activation for Services 14

Project Scope 1.65  Automate service activation  Streamline the flow between ordering and provisioning  Enable a seamless flow between trial and purchase order  Enable a consistent service activation experience for our customers across all services sold by Microsoft via volume licensing  Resolve MSU billing issue for Enterprise Subscription 15

OLS Model Overview Order Process Services should be ordered through the standard direct partner ordering tools. Select/EA Contact preferred reseller and place order Download Antigen Products from MVLS site or Monthly VL Media Kit Contact preferred reseller and place order Receive CD of your licensed Antigen product (5-10 days) Receive confirmation of Subscription License Open

Volume Licensing Activation

Launch dynamics Pricing: Oct06: Enterprise CAL skus can be found in the pricelist Nov06: Office 2007, Vista skus and corresponding step-up SKUs can be found in the pricelist Product: Media: –Office 2007 and Vista media will be available in the Jan07 VL kits Download: –Office 2007 and Vista will be available via download from MVLS approximately mid Nov06 –The products can also be available via the sitewww.microsoft.com Vista media: The media that will be in the VL kit is the Windows Business version. To obtain Windows Enterprise, customer will need to request via the SAB process Windows Ultimate: It is the first operating system that combines all of the advanced infrastructure features of a business-focused operating system, all of the management and efficiency features of a mobility-focused operating system, and all of the digital entertainment features of a consumer-focused operating system. When customers activate their SA Windows Vista Ultimate benefit, they will be shipped the Welcome Kit for Windows Vista Ultimate which will include the media as well as one product activation key. Customers are also entitled to subscription kits based on their agreement.

Volume Activation Options MAK KMS ProxyIndividual Purpose Centrally managed activations of multiple PCs Per machine activation Centrally managed activations of multiple PCs Activations One time; No re-activation required Re-activation at least every 180 days PC environment PCs may/may not connect to the Internet PCs usually connect to Internet Managed PCs that regularly connect to corporate networks How PCs activate One connection to Microsoft to activate multiple PCs Each PC connects to Microsoft to activate Each PC connects to company network to activate/re-activate

Reduced Functionality Mode (RFM) RFM entered when Windows has not been activated within 30 day grace period. This can happen when: Machines have failed to activate against internal KMS or Microsoft Significant hardware changes which require re-activation KMS activated PC fails to re-connect to KMS within 180 days  Failure to pass Genuine validation  Reduced functionality state  Allows browser access for one hour per login  Options to activate system by phone or internet, or type in a valid product key

Licensing PartnersMicrosoft Operations Key Summary Understand the policies/procedures associated with OnLine Services model Support to licensing customers from VLK deployment standpoint Engaging the Licensing partners on the finalized 1.65 version of OLS changes Continue to collaborate with Licensing partners on the understanding of policies/procedures of OnLine Services model

Thank You Microsoft provides this material solely for informational and marketing purposes. Customers should refer to their agreements for a full understanding of their rights and obligations under Microsoft’s Volume Licensing programs. Microsoft software is licensed, not sold. The value and benefit gained through use of Microsoft software and services may vary by customer. Customers with questions about differences between this material and the agreements should contact their reseller or Microsoft account manager. © 2006 Microsoft Corporation. All rights reserved. Microsoft is a registered trademark of Microsoft Corporation in the United States and/or other countries.