May 12, 2005

VSTS, Round 2

Three weeks after my last post on the VSTS pricing fiasco, Sanjay Parthasarthy has released a new message from the Visual Studio team.
We announced our product line and pricing in March, significantly ahead of product availability. What we heard from customers time and again was that they wanted Microsoft to provide as much advance notice as possible regarding product changes. Since the March announcement, we have received quite a bit of feedback about the SKU strategy, pricing and licensing.

We will place a limited version of Team Foundation Server in each edition of the Visual Studio Team System family (Architects, Developers and Testers). This version will be restricted to a maximum of five users and should serve the needs of smaller organizations. Teams that have a need for more users should still find that Team Foundation Server is significantly more cost effective than current source code control solutions and offers tremendous value through its role as the core of integration across all of the Team System.

To address the broader feedback on pricing, we have also finalized promotional pricing around Team Suite to enable current subscribers to more easily upgrade to the full Visual Studio product line. Going forward into 2005, MSDN Universal customers will have three choices:

Universal subscribers that want all of the client functionality of Team System will be able to upgrade to Team Suite by paying just the incremental software assurance or renewal price for the duration of their agreement. In retail, this amounts to around $2,300 and for most customers this represents a 75% or more discount on the full price of Team Suite. Volume customers will, of course, pay less.
Universal subscribers who want Team Edition for Software Architects, Team Edition for Software Developers, or Team Edition for Software Testers will be able to upgrade at no additional cost. Each of these “role Editions” includes the MSDN Premium Subscription.
Universal subscribers who want the 2005 equivalent of MSDN Universal can simply choose Visual Studio 2005 Professional Edition with MSDN Premium Subscription and get the functional equivalent of MSDN Universal for about 15% less than what they paid today.

The product team has also updated the information on the entire Visual Studio 2005 line at Pricing details are at

We will continue to improve the site based on your feedback and our customers’ feedback, so please keep the input coming.

(Quoted from David Boschmans' blog.)

So, let's start with the good. Microsoft made the right decision including a limited version of TFS inside each copy of a Team Edition. Team Foundation is leaps and bounds above SourceSafe, and the five-user limit is reasonable. Given that they're highballing the CAL's, it might be more reasonable to give the server away for free, and make all their money off of the CAL's for Professional and the insane pricing for VSTS, but this is a step in the right direction.

The upgrade pricing to Team Suite ($2,300) from MSDN Universal is also reasonable.

Microsoft corrected their original FUBAR where they had Visual Studio 2005 Tools for the Microsoft Office System (say that 3 times fast) at Team Edition prices and they put it at the same price as the Professional Edition.

Now for the bad...we still don't have Team Edition SKU's untethered from MSDN Premium for individuals and smaller development houses. Larger development houses using Open Licensing that are renewing will pay more per seat for their Team Edition SKU's than smaller houses renewing (Larger houses: $6,382 for 2 years per seat; Smaller houses: $4,598 for 2 years per seat).

(Before I continue, I want to make a small point. Let's say I have two pieces of wood that are the same size. One was sold to me last year, was called "Wood," and was sold to me for $5. The other was sold to me this year, was water-treated, was called "Construction Materials," and was sold to me for $50. Just because the name changes and a couple of features are added doesn't mean the product is just means that marketing got ahold of it.)

Microsoft still has to prove that Team Suite and the Team Editions are an excellent value if they want to win the market. Right now, they can prove they are an okay value in that what you get in the box is priced comparably to products from established industry players who have been doing this for years. However, this has two issues.

First, Microsoft still has the version 1 curse over its head. You know the curse..."Nothing from the House that Bill built will be worth anything until it hits the third major version..." Developers know the curse better than anyone, as we've been bitten by it many a time. DOS was miserable to code for until v3.3... Windows 16-bit was miserable until v3.1... Windows 32-bit was miserable until Windows 98 (Win32->Win95->Win98)... NT was miserable until Windows XP (NT->2000->XP)... "The Rule of Three" rules Microsoft, and I don't see this product being any different.

Second, Microsoft seems to actively be trying not to win. They went and spoke to who they were going to be competing with prior to announcing(SourceGear, etc.) and priced themselves so that they wouldn't be a threat. Microsoft has never won a market by playing "nice." They've always played hardball and in the end, either owned the market outright (Office, Windows), held a major presence which they used to advance the market (Money, SQL Server, Windows Mobile), or realized they were losing and dropped the market (UltimateTV).

So Microsoft, get back to me when you have an untethered individual SKU for Team Developer at a price resembling Enterprise Architect/Enterprise Developer, and we'll try "Round 3."

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