Microsoft Pricing and EA Evolution: Disruptor to Dominator

Prior to establishing Microsoft, Gates and Allen had already formed another company while they were both still students at a high school in Seattle. They designed a computer system that automatically processed traffic counting data called Traf-O-Data. The aim of this was to read the raw data that was produced by roadway traffic counters and transform these into reports for traffic engineers.

Apparently, they had a limited amount of success with the company, but it helped them to develop the computer programming skills that was instrumental in founding Microsoft. It also gave them the opportunity to develop their business skills, turning Microsoft into the huge success it became. And not just a success for Microsoft, but also for investors. A share of stock bought on March 3, 1986 at $20, is now worth a whopping ~90K times more!

That growth is driven by Microsoft’s customers adopting these tools, in droves as a standard after the introduction of Microsoft Windows as an OS in 1985, and the announcement of Microsoft Office at the COMDEX Las Vegas in 1988. The introduction of SQL and Windows Server further cemented Microsoft’s presence in the business world.

Sound plays an influential part in how we view the world. It gives us social cues and evokes certain emotions. Using sound to help cement Microsoft into our psyche, they developed with the introduction of Windows 95 a short tune that anyone over the age of thirty five knows. It included the oh-so familiar 7 second startup sound, which for us music buffs, is composed by Brian Eno (member of the English Rock Band Roxy Music and producer for U2, David Bowie and others).

With all this success however, comes a familiar pattern of evolution by most companies, wherein they start off as the disruptive start up, moving to a reliable market player, to dominant market leader who can foist tyrannical pricing and terms on to their customer base who are desperate to keep the status quo.

To counter this dominant and often tyrannical market position, NET(net) has been working with clients over the past 15+ years to right-size license entitlements with their deployments, along with negotiating discounts down from Microsoft Level A through D price lists.

The process to realize your own market 'correction' follows a familiar pattern and I have included an example of a recently completed engagement for a Medical Equipment Company:

1. Introduction – First phase of the engagement with opportunities identified and engage to capture:
  • NDA and exchange of information
  • Strategy sessions to align Client goals and current spend
  • High level review of initial renewal offers
2. Assessment – NET(net) begins detailed assessment of Microsoft estate for opportunities, constraints, and other key factors that will impact negotiations:
  • Analysis of current state and desired future state
  • Short timeframe between project kick-off and agreement expiration - 15 days
  • Need to add incremental services while holding costs steady
3. Opportunities & Recommendations – In the resulting deliverable FO&R: Findings, Opportunities and Recommendations, NET(net) identified specific and incremental points for improvement:
  • Performed detailed analysis of requirements
  • Adjusted for licensing quantities & new acquisitions
  • Optimization of licensing utilization
  • Enhanced and improved renewal strategy
  • Incremental discount targets identified
  • Developed purpose-built strategy to achieve goals
4. Negotiation Strategy – The Supplier Negotiation Platform includes a purpose-built strategy to achieve goals:
  • Advised and shared Federated Market Intelligence based on thousands of previously negotiated deals
  • Defined strategy for sequence, cadence & prompters for all supplier communications & interactions
  • Provided detailed guidance in every step of process, negotiated directly with Microsoft.
  • Above points culminated in a final proposal that met all goals and pricing targets
5. Outcome – Optimization realized across all deal elements presented in Final Report Deliverable:
  • Net savings of 18% yielding a 556% ROI
  • Savings realized across all SKU elements including Office and Dynamics365
  • Licensing clarity around future spend and configurations
  • Framework achieved to support ongoing management and growth

The result is a happy client with a right-sized and value-optimized Microsoft Agreement providing NET(net) with a 10 Net Promotor Score (NPS).

So, more often than not, there is the possibility to optimize your Microsoft spend upon renewal.  NET(net) has experienced staff, a proven methodology and targeted approach to maximize that outcome.  Click the 'Contact Us' link  at the top of this page if you want to review with a Subject Matter Expert.

About NET(net)

Founded in 2002, NET(net) is the world’s leading IT Investment Optimization firm, helping clients find, get and keep more economic and strategic value. With over 2,500 clients around the world in nearly all industries and geographies, and with the experience of over 25,000 field engagements with over 250 technology suppliers in XaaS, Cloud, Hardware, Software, Services, Healthcare, Outsourcing, Infrastructure, Telecommunications, and other areas of IT spend, resulting in incremental client captured value in excess of $250 billion since 2002. NET(net) has the expertise you need, the experience you want, and the performance you demand. Contact us today at, visit us online at, or call us at +1-866-2-NET-net to see if we can help you capture more value in your IT investments, agreements, and relationships.

NET(net)’s Website/Blogs/Articles and other content is subject to NET(net)’s legal terms offered for general information purposes only, and while NET(net) may offer views and opinions regarding the subject matter, such views and opinions are not intended to malign or disparage any other company or other individual or group.

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