The costs you're disputiing are the costs of replacing MS with non-MS office solution.
You keep imagining that those are costs of upgrade to new version of MS Office. NOOOO. Those are money to pay if they decide to change, say, to Open Office.
Because the cost is so high, they are willing to invest in new hardware. And get rid of Novell. Even though getting rid of Novell would mean accuiring a few helicopters to ferry windows administartors around. Comparing to the cost of keeping Novell (and abandoning Microsoft) this is peanuts.
And yes, you are right: the only illegal part of this picture is MS refusing to sell upgrade unless Novell is out.