Get the Best Bona Fide Price on Your Purchase of Microsoft
Office XP: Savvy shopping tips for Small Businesses
By Joshua Feinberg

In one of my "other" jobs as co-owner of KISTech Computer Consulting (http://www.kistech.net), I'm often asked to advise our small business clients on the most cost-effective way to purchase PC hardware, operating systems, and applications.

In this installment of Money-Saving Techniques and the next, we'll look at a little-known way to get the best legitimate deal (i.e. "legal") on the purchase of Microsoft Office XP for small businesses.

Tip: If your small business currently uses Microsoft Office 2000, Smallbiztechtalk.com believes there is no compelling rush to upgrade to Microsoft Office XP. For details, see our June 4th article Microsoft Office XP - Not Exactly Death and Taxes for Most Small Businesses, at http://www.smallbiztechtalk.com/news/archives/tips060401-bn1.htm .

Cutting your losses

Here's a common scenario. Your small business is growing and you've just added a new employee.

In the two-week scurry to get "everything" ready for the new hire, you remember that your "old" PC is still sitting idle in the supply closet. So, there is no need to buy a new PC, right?!?

Separation anxiety

And of course you swear that your "old" hardware isn't that old. It's got a "respectable" Pentium 133Mhz processor, 64MB of RAM, and a 2GB hard drive.

At the time it was "retired" in early 1998, it was running the same OEM-bundled software as when you purchased it from Dell: Microsoft Windows 95 and an early 32-bit version of Microsoft Works.

However, during the past three and a half-years, your small business has since standardized on Microsoft Office 2000, Microsoft Windows 2000 Professional, and 100 Base-T Ethernet LAN connections.

So now you're thinking, your "old" PC would be perfect for the new hire in customer service, who will primarily be using the PC for word processing, spreadsheets, e-mail, and web browsing.

Note: The purchase price examples for Microsoft Office XP are based on U.S. Retail Pricing. For published retail prices outside the U.S., check with your local Microsoft subsidiary. You can find a listing of these subsidiaries at Microsoft Worldwide Sites - http://www.microsoft.com/worldwide/ .

Know what you're "in for"

The trouble is though, to make the new hire's PC "compatible" with those in use at your small business, a number of upgrades will be required by either your internal guru or small business computer consultant.

Forgetting about the time element (not a good assumption with "expensive" computer consultants), you'll need to purchase

a "full", non-upgrade version of Microsoft Office XP Standard (estimate $479 U.S.)
a product upgrade to Microsoft Windows 2000 Professional (estimate $219 U.S.), assuming the Windows 95 software bundled from Dell even had upgrade rights, otherwise estimate $319 U.S. for "full" product
64MB of RAM and a 10/100 Base-T Ethernet adapter (estimate $85 U.S.)

Now, even before you consider that this work will take an experienced internal guru or small business computer consultant 3-4 hours to complete, you have estimated product expenses upwards of $800 U.S., plus sales tax and possibly freight.

If your "gut feel" tells you this sounds like a bit too much money to invest in a PC that's over five years old, and whose warranty is long expired, you're on the right track.

For this kind of expense, you are approaching the price point for a new PC that would already include everything you're considering purchasing a la carte, plus much newer PC hardware and a product warranty.

Tip: Also, don't forget that you haven't even tested yet for compatibility with Microsoft Windows 2000, or evaluated Year 2000 compatibility.

Don't buy it - get it bundled with a new PC purchase

In late 1999, I was out to Microsoft's headquarters in Redmond, Washington visiting with some folks in the small business and channel groups.

One afternoon, I was having a discussion with a director from one of the channel groups, which has since be "reorg'd" out of existence.

We spoke about how small business resellers and computer consultants were baffled by the complexity of Microsoft's then current Open License software program.

Conflicting Opinions at Microsoft

I explained how since KISTech Computer Consulting didn't build its own PCs (known as "white box" PCs), we advised our clients to acquire their operating system and application software licenses at the time of purchase on a new PC desktop or laptop.

At the time, it was the "best" deal in town. And to a large degree, it still is.

To this day, I still remember that my friend the channel manager didn't like my purchase strategy, or that I was advocating it from my small business column in a national magazine. He had a dilemma.

When resellers purchased product SKUs of Microsoft Windows and Microsoft Office through the major distributors, such as Ingram Micro or TechData, his channel group had an easy way to track resellers' purchases, as justification for a bigger channel budget from Steve Ballmer's executive management group.

However, when resellers recommended that their clients "purchase" software bundled with hardware from a major OEM, like Compaq, Dell, or Gateway, his group had no way of accounting for the OEM revenue in his annual presentation to the higher ups at Microsoft.

But since most small business computer consultants and resellers are hired to look out for their clients best interests, I still to this day recommend that small businesses consider acquiring their Microsoft software licenses at the time of purchase of new PC hardware.

Your Microsoft Office XP Options

As first explained in Microsoft Office XP - Not Exactly Death and Taxes for Most Small Businesses, (http://www.smallbiztechtalk.com/news/archives/tips060401-bn1.htm) Microsoft has dropped some of the versions of its Office product line during the transition from Office 2000 to Office XP.

Microsoft Office Premium, first introduced with Office 2000, no longer exists under Office XP; however, there is an Office XP Professional Special Edition, available for a limited time from select resellers.

And much to our disappointment, Microsoft Office Small Business no longer exists as a retail SKU under Office XP.

Rather, Microsoft Office XP Small Business is only available when bundled with PCs through authorized OEMs.

So for the purchase of Microsoft Office XP as a "full" product, as opposed to buying it through a site license or bundled with the purchase of new PC hardware, there are two primary choices for small businesses.

The only differentiating factor is that Microsoft Office XP Professional includes Access 2002 and is priced at $579 U.S., whereas Office XP Standard excludes Access 2002 and costs $479 U.S.

Why Microsoft PowerPoint and Microsoft Publisher May Not be Required In Your Company

In the nearly five years since the release of Microsoft Office 97, we've found that most small business end users primarily leverage Word, Excel, and Outlook.

We've also noticed that in sharp contrast to Fortune 1000 environments, only small business sales and marketing personnel tend to utilize Microsoft PowerPoint; so it's typically not installed across-the-board in small businesses.

In addition, although Microsoft Publisher is a fabulous basic desktop publishing application for small businesses, our experience is that the biggest concentration of small business fans for Microsoft Publisher is in companies with fewer than five employees.

In larger small businesses, it typically becomes critical to adapt a more sophisticated design image.

As a result, we see many small businesses outsourcing their desktop publishing to an advertising agency, marketing consultancy, or graphics design firm. So in bigger small businesses, Microsoft Publisher is rarely tapped.

Microsoft Access as the Pivotal "App"

So given that not all small businesses need Microsoft PowerPoint or Microsoft Publisher on every PC, Microsoft Access really becomes the deciding "app" in selecting whether you follow Path A or B.

Path A - Either purchase Microsoft Office XP Standard, as a retail product (estimate $479 U.S.), or get Microsoft Office XP Small Business included with the purchase of a new PC, as detailed below. Essentially $479 U.S. vs. "free", if you already "need" a new PC.
Path B (if the majority of your employees need Microsoft Access) - Either purchase Microsoft Office XP Professional, as a retail product (estimate $579 U.S.), or get Microsoft Office XP Professional for $199 with the purchase of a new PC, as detailed below. Essentially $579 U.S. vs. $199 U.S., if you already "need" a new PC.

Tip: The OEM end user license agreements for bundled software are very clear about not being able to transfer or "trade" the bundled software to a different PC. Bundled Microsoft Office XP needs to stay with the purchased hardware. Save your packing slips from the PC purchase, with accompanying serial number records, as additional documentation of the software license.

Via Compaq

Compaq DeskPro EXS
800Mhz Intel Celeron processor
10GB hard drive
128MB RAM
Windows 2000 Professional
3 year warranty (1st year on-site)
10/100 Base-T Ethernet network adapter
CD-ROM drive
$799 U.S. with Microsoft Office XP Small Business
add $199 U.S. for Microsoft Office XP Professional ($998 U.S.)

So if your small business' standard configuration doesn't include Microsoft Access, you can purchase Microsoft Office XP Standard for $479 U.S.

Or alternatively, a Compaq DeskPro EXS is available with Microsoft Office XP Small Business for a mere $320 U.S. more ($799 U.S.).

Note: Microsoft Office XP Small Business includes Word, Excel, Outlook, and Publisher. It does not include PowerPoint or Access.

That's a phenomenal deal, to get a fully configured new Compaq PC with Microsoft Windows 2000 Professional for $320 U.S. more than the price of Microsoft Office XP Standard by itself.

Remember, we mentioned earlier that Microsoft Windows 2000 Professional, on its own, could be as much as $319 U.S.

What if you need Microsoft Access 2000?

It's your choice. You can purchase Microsoft Office XP Professional for $579 U.S. by itself, or get it included with the purchase of a new Compaq DeskPro EXS for a mere $419 U.S. more ($998 U.S.).

Note: All listed desktop PC configurations for Compaq, Dell, and Gateway were gathered online on July 12, 2001 and are based on Smallbiztechtalk.com's recommended entry-level small business configurations. All configurations are based on U.S. prices and availability and exclude monitors, freight, and sales tax.

Via Dell and Gateway

Now what if your "brand allegiance" is to another leading PC vendor, such as Dell or Gateway?

Does this procurement strategy still work? Absolutely!

Note: You can find a table providing examples from Dell and Gateway at http://www.smallbiztechtalk.com/news/archives/tips071601-ms1.htm .

Impact on Small Business Computer Support Costs

So far, we've seen some huge compelling out-of-pocket cost-savings in acquiring Microsoft Office XP through PC hardware bundling.

But how does getting Microsoft Office XP at the time of purchase of a new PC help lower your small business computer support costs?

First, there's no need to try to retrofit your old PC with newer hardware and software. As mentioned earlier, not only can this consume a half-day or more, there's inherent risk in trying to make the latest software work with hardware that was designed several years ago. Although Microsoft has some really good tools for assessing hardware compatibility with Windows 2000 Professional, this also adds time to the project.
Second, by having the Windows 2000 Professional operating system factory-installed, you eliminate the need for device-driver scavenger hunts. Everything included with the PC should work right out of the box.
Third, there's no reason to sit through a time-consuming Windows 2000 Professional or Microsoft Office XP software install.
Finally, you have resources available if something goes wrong. For example, Compaq, Dell, and Gateway all have extensive online support resources and 7x24 phone support.

The Bottom Line

If you have an aging PC that needs to run Microsoft Office XP, it doesn't make sense to purchase Microsoft Office XP as a retail product if you first need to incur component upgrade expenses and make time-consuming, and potentially risky, hardware configuration changes.

The cost of an entry-level small business-class PC, from one of the leading OEMs, is roughly the same price as buying Microsoft Office XP and Windows 2000 Professional a la carte. So why not upgrade your old clunker of a PC at the same time, and save yourself the expensive and potentially massive aggravation.

In the next installment of Money-Saving Tips, we'll do a relative cost analysis of buying Microsoft Office XP as a retail SKU, compared to setting up a small business site license program. http://www.smallbiztechtalk.com/news/archives/tips073001-ms1.htm

Joshua Feinberg is an internationally recognized small business technology expert, consultant, columnist, author, keynote speaker, and trainer. He is a published Microsoft Press author, as well as the creator of and two-year veteran writer of the Microsoft Direct Access "VAPVoice: Notes From the Field".
Learn what your highly paid computer consultant doesn't want you to know!

Get the Best Bona Fide Price on Your Purchase of Microsoft Office XP: Savvy shopping tips for Small Businesses By Joshua Feinberg