Microsoft updates licensing rules to compete with Google, AWS, Alibaba, with Azure Dedicated Host

Overview

On August 1, 2019 Microsoft made the following announcement of a new infrastructure service Azure Dedicated Host, and updated their licensing terms to compete with established dedicated host offerings from hyper-scale cloud providers: AWS and Google and Alibaba.

Microsoft have announced Azure Dedicated Host will offer greater visibility and control over the hardware layer and maintenance operations, processor type, number of cores, and different VM sizes within the same VM series on the given host. This addresses a gap in their service offering to compete with established dedicated host offerings from AWS, Google and Alibaba.

Microsoft have also announced that effective October 1st 2019, an material update to their longstanding ‘outsourcer’ licensing terms that will impact customers who have purchased licenses without Software Assurance (SA) and mobility rights on dedicated host infrastructure services, provided by a discrete list of named ‘Listed Providers’: Alibaba, Amazon (including Vmware Cloud on AWS), Google, and Microsoft.

When will the changes apply?

Microsoft have stated that customers that purchase new licenses on or after October 1, 2019, or upgrade to a new product version released on or after that date, the new updated licensing terms will apply.

If you are using software under subscription licenses you are bound to the new terms on the earlier of renewal of your subscription or an upgrade to a version of software made available on or after October 1, 2019.

For licenses purchased before October 1, 2019, you will be able to continue to use the software under the terms of the originally licensed product, or until upgrade to a version of software made available on or after October 1, 2019.

What are the planned changes?

  • Microsoft will expand the scope of License Mobility through SA for eligible licenses with active Software Assurance (SA), to be assigned to dedicated host cloud services from ‘Listed Providers’ who are an Authorized Mobility Partner (AMP), including Azure Dedicated Host. For example, Exchange Server, SharePoint Server, Skype for Business Server, and SQL Server. Formerly, this benefit could only be used in shared tenancy environments and will now be expanded to dedicated hosts.
  • Microsoft will restrict Bringing Your Own Licenses (BYOL) for License Mobility eligible products, when licenses were purchased without SA, or where SA has lapsed, to dedicated host cloud services from ‘Listed Providers’, including Azure Dedicated Host. Formerly, this was permitted on dedicated hosted servers under the ‘outsourcing’ provision.
  • Microsoft will restrict licenses to be assigned to dedicated host cloud services from ‘Listed Providers’ that are not eligible for License Mobility. For example, Windows Server, Windows Desktop OS, Microsoft Office, or software covered under Visual Studio developer subscriptions.
  • Microsoft SQL Server and Windows Server licenses with active SA can be assigned under an expanded ‘Azure Hybrid Benefit’ to Azure Dedicated Host.
  • Microsoft will restrict ‘Unlimited Virtualization Rights’ that enabled unlimited VMs to be scheduled (hardware permitting) for SQL Server Enterprise with SA, and Windows Datacenter on ‘Listed Provider’ dedicated host services from AWS, Google and Alibaba.
  • Microsoft will offer Extended Security Updates for all SQL Server and Windows Server workloads on Azure Dedicated Hosts at no additional charge.
  • To ensure continued security updates for SQL server 2008 and 2008 R2, and Windows server 2008 and 2008 R2 workloads at end of extended support on Alibaba, AWS and GCP, you will need to upgrade, or maintain active SA on the licensed servers to purchase Extended Security Updates.
  • Microsoft software is still available to you through ‘License Included’ offerings from ‘Listed Providers’ that participate in the Services Provider License Agreement (SPLA) program, and ‘License Included’ services available through Microsoft Azure.
  • This will not apply to other dedicated hosting providers and SPLA partners. The planned licensing changes only apply to Microsoft, AWS (Including Vmware on AWS), Alibaba, and Google.

What are my licensing options?

Table 1 – Options for Microsoft Customer’s based on upcoming October 1st Licensing Changes

Listed Providers – Dedicated Host Azure Dedicated Host Only
Product Group Licenses Purchased before October 1, 2019 Licenses Purchased On or After October 1, 2019 Licenses Purchased On or After October 1, 2019
Bring Your Own Licensing (BYOL) for Windows Server Assign licenses to Dedicated Hosts

(Until version end of support, or an upgrade to a version of software made available on or after October 1, 2019.) †

Not permitted. *

Select ‘License Included’ offerings.

Permitted via ‘Azure Hybrid Benefit’ –

Assign licenses to ‘physical cores made available to you’ for Datacenter Edition, or Individual VMs for Datacenter and Standard Edition.

BYOL for SQL Server, and MS Application Servers. ‡ Assign licenses to Dedicated Hosts

(Until version end of support, or an upgrade to a version of software made available on or after October 1, 2019.) †

Permitted, but now requires active Software Assurance (SA).

 

BYOL for Office Professional Plus Assign licenses to Dedicated Hosts. † Not permitted. *

Select ‘License Included’ offerings.

BYOL for Windows Enterprise (Desktop OS) Permitted with Windows Enterprise SA and Windows Enterprise E3/E5 User Subscription Licenses (USLs) † Not Permitted. *§

Option to purchase VDA E3/E5 USLs at renewal.

 

Unlimited Virtualization Rights Unlimited VMs permitted with Windows Server Datacenter and eligible SQL Server Enterprise licenses when assigned to all physical cores on dedicated host. Not permitted. * Permitted with ‘Azure Hybrid Benefit’ –

Assign licenses to ‘physical cores made available to you’

Windows Server CAL Requirement Required. Select ‘License Included’ offerings. Not Required with ‘Azure Hybrid Benefit’.
Visual Studio MSDN Permitted. † Not permitted. Not permitted.

[Reference: Please refer to the published Microsoft FAQs documentation and the Microsoft Product Terms. The Microsoft Product Terms, August 2019, have been updated for Azure Dedicated Host]

  • * Please refer to your Microsoft Enterprise Agreement (EA), and other binding Volume Agreement contract documentation, and Microsoft Product Terms, as applicable.
  • †If you are using software under subscription licenses you are bound to the new terms on the earlier of renewal of your subscription or an upgrade to a version of software made available on or after October 1, 2019.
  • ‡ This includes, but is not limited to: SharePoint Server, Exchange Server, and Skype for Business Server. Please refer to MS application server products that are ‘License Mobility’ eligible in the Microsoft Product Terms for all impacted products.
  • §Microsoft provide a limited ‘grace period’ exception for customers renewing Windows Enterprise SA, or USLs, between October 1, 2019 and October 1, 2020 to move their Windows Enterprise workloads off the “Listed Providers’” dedicated offerings by October 1, 2020.

Recommendations

SoftwareONE is offering two distinct solutions to help guide you through this announcement:

  1. Use our Microsoft Advisory Services (MAS) to stay on your existing cloud provider or understand options with Azure. Ensure you have a strategy and understand the commercial impact ready for the upcoming changes beginning October 1, 2019.
  2. Leverage our AzureSimple offering (which includes free migration service bundles for new Azure customers, i.e. no existing Azure contracts).
  3. Work with our Technology Services to plan, design, and migrate to your target cloud.
  4. Start with our SAMSimple offering to enable license compliance and management of your on-premises license assets and cloud services
  5. If you are providing services to your end-customers, you can participate in the Indirect CSP program with SoftwareONE. This is recommended as a faster and simpler model and a good choice for partners who don’t want to manage as much infrastructure, and can team up with SoftwareONE as an indirect provider to handle their support, billing, and invoicing needs on Azure.

References

Thanks All


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This website is a way to give back to the licensing community and as an information resource for all customers that work with Microsoft software and licensing. I hope you find it of value.

Tony Mackelworth is Head of Microsoft Advisory Services at SoftwareONE

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