Microsoft has announced price changes to Microsoft Services Provider License Agreement (SPLA) which will be effective from January 2011.

It has slashed prices of some of its Windows Server SKUs which includes a 21 percent price reduction for Windows Server 2008 R2 Web, Standard and Enterprise.

However, the Windows Server 2008 R2 Datacenter price has been hiked by 30 percent and applies only for SPLA providers and not for other volume licensing agreements. It stated that the earlier price was only promotional and it had abstained twice from implementing the full price in 2009 and 2010. And thus the current 30 percent hike is actually a cut over the original price. Also the price hike has been justified as the Datacenter provides unlimited virtualization rights, allowing the ability to host multiple applications.

The primary motivation for the price cuts is to better align SPLA prices with subscription prices.

Microsoft also stated in a blog that it is shying away from cash-ectomy mode of sale which it defines as the removal of as much cash as possible from a customer regardless of the volume of the sale. That approach rarely works for very long as customers compare notes and quickly realize that the price they paid was far more correlated to their budget than it was to their volume.

The Microsoft SLPA program offers commercial hosting businesses the option to pay monthly for the products used as well as the rights to license Microsoft software for hosting. The beneficiaries include commercial hosting businesses like Web hosting, hosted applications, messaging, collaboration, platform infrastructure, and streaming media, business-process outsourcers, PC-rental companies, Web or Internet services providers and IT outsourcers that provide software licenses. The SLPA is primarily designed for hosting providers and Independent Software Vendors (ISVs).