Microsoft's latest software licensing changes have received a cautious welcome from customers in the UK.

The supplier last week announced a series of extra benefits at no charge in an attempt to boost the popularity of its controversial Software Assurance (SA) scheme.

The move is designed to appease users who felt the licensing model was poor value for money. From 1 September, SA customers will have extra rights such as free copies of Office for home use by staff, discounted software for personal use, online learning tools, training vouchers, free technical support and access to Windows source code.

The new features are effectively Microsoft's first public admission that it made a serious mistake with the original SA scheme, which only offered free upgrades to new software versions.

'We are not trying to underestimate how much we alienated people last year,' Microsoft UK licensing manager Sue Hogg told Computing.

'We recognised we needed to enhance the offering. It's an important vehicle to maintain customer relationships and we needed to do more to make SA an attractive proposition.'

Bill Landefeld, Microsoft's vice president for worldwide licensing and pricing, says the changes in SA are the beginning of efforts to reconnect with customers and rebuild relationships strained as a result of its introduction.

'We've heard the criticism, and we've learned from our past missteps,' he said.

David Roberts, chief executive of blue-chip user group The Corporate IT Forum says the additions to SA are a good sign, but do not overcome all the concerns about Microsoft's licensing model.

'This is a moderate movement in the right direction,' he said.

'It is good to see offers for employees and home workers. But the principal area of concern is the upgrade frequency, which is currently considered short to the point of abrupt. I'd like to see longer upgrade cycles.'

Microsoft is still awaiting a response from Whitehall buying arm the Office of Government Commerce (OGC), its biggest UK user. The OGC signed a £360m licensing deal with Microsoft last year covering the public sector's 1.7 million desktops to overcome concerns that SA could have cost the taxpayer £60m.

'We have noted the revision by Microsoft of its Software Assurance offering, a product that falls within the OGC-led government agreement with Microsoft and are currently in the process of identifying the benefits to Government,' said a spokesman.

But small and medium sized businesses (SMEs) could be the biggest winners from the new SA terms, says Dave Simpson, sales and marketing director of Microsoft reseller Softcat.

'Everyone knew that SA was of little value, but now Microsoft are 90 per cent of the way to getting it back. The sweet spot is probably in medium sized companies - the changes are a lot more valuable to SMEs than large enterprises,' he said.

Simpson says that Softcat secured a £400m licensing contract as a result of the new SA features.

'Our customer went for it on the basis of home use rights and free technical support for servers. This is the most positive thing Microsoft has done for some time.'

Gartner analyst Alvin Park says the enhancements make SA worth another look for users that previously avoided buying it.

'Microsoft's move should help pacify dissatisfied customers and perhaps convince them not to move to other vendors. If you haven't bought SA in the past, re-evaluate the decision on future purchases,' he said.

But Park says Microsoft's software support is still more costly than most of its rivals. He says the software giant charges 25 to 29 per cent of new licence fees for annual maintenance, compared with 25 per cent by IBM, and 22 per cent from Oracle.

IDC research director Al Gillen says that customer reactions will be the ultimate barometer for the new SA features.

'This rounds off SA to give it a much better value proposition regardless of upgrade cycles,' he said.