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Microsoft offers different rates for different Office usage

Microsoft Office 2007 Professional box

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Kai Ryssdal: If you use Microsoft Office at work, like almost all of us, you've probably noticed there are some applications you use a lot -- like Outlook and Word -- and some you use less -- like Excel or Powerpoint.

Either way, your company pays license fees for all of them, because that's the way Microsoft does business. You buy the whole bundle or nothing at all.

New York City has managed to work out a different deal today. Marketplace's Alisa Roth reports.


Alisa Roth: New York City used to have more than 40 separate licensing agreements with Microsoft. And they were all for the whole suite of software products.

Now, the city will have just one contract, and it'll pay different rates for different employees. New York says the deal will save around $50 million over five years.

Carole Post is the city's commissioner in charge of IT.

Carole Post: The city and Microsoft recognize that different users use different tools and we've priced that accordingly.

So the license for the assistant who just uses Outlook will be cheaper than the license for the commissioner who needs Outlook and PowerPoint and Excel and Word.

Rob Helm is an analyst at Directions on Microsoft, an independent research firm.

Rob Helm: It opens up a bit of a crack in Microsoft's one-size-fits-all pricing strategy for large organizations, and it could lead to other large customers asking for other, similar deals.

Deals Microsoft may have to agree to in order to compete against companies like Google for big government contracts.

In New York, I'm Alisa Roth for Marketplace.

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