One in five companies have been unable to buy Microsoft's discount volume licensing package before the deadline last week because of the unexpected costs, according to analysts.
And many of those that did upgrade cannot afford to deploy the licences and have been forced to raid other areas of their IT budgets.
Rob Enderle, senior analyst at Giga Information Group, told vnunet.com that a survey of clients found that around 40 per cent had not signed up, with half citing the cost.
"About 20 per cent just couldn't afford it," he said. "A lot that did pulled money from other areas, which has hit things like desktop hardware sales. Of those that went for it more than half don't have the money to install it."
From 1 August Microsoft's Licensing 6.0 abolished the upgrade discount on volume licensing packages.
Customers wanting to upgrade to newer versions of Microsoft software during the lifetime of their agreement will now have to pay the full amount instead of a trade-in price.
User group Elite said that 70 to 80 per cent of its members had signed up, and resellers reported brisk sales, with Ideal Hardware seeing a six-fold increase in business leading up to the deadline.
But many users had already planned for future Windows upgrades and could not bring them forward, according to Peter McCartney, Microsoft alliance manager at corporate reseller Computacenter.
McCartney explained that one finance house had a Windows XP and Windows 2000 server upgrade planned, but could not afford to bring it forward.
"The changes came about after organisations had set their budgets," he said. "Some companies simply haven't been able to get the money whether they wanted to upgrade or not."
One user, United Utilities, upgraded at four of its five business units, but is also looking at alternatives to Microsoft.
"One of the businesses is looking at replacing Microsoft with Sun's Star Office but there are always the costs of moving away from Microsoft, such as retraining and re-navigation, to consider," said Sean Sullivan, IS strategy and assurance director at the company.
Sue Page, licensing manager at Microsoft UK, confirmed that the company is not releasing sales figures for the Upgrade Advantage package, but claimed to be "satisfied" with the numbers.
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