What You Need to Know About Microsoft’s Upcoming Licensing Changes
On June 25, 2018, Microsoft announced a series of price and licensing changes that became effective October 1, 2018.
These changes will impact Microsoft’s hero suite of products and most of the companies that use them. Government, healthcare, finance, and retail will be the most affected segments, while educational and non-profit organizations are not subject to the changes (at least for now).
Here is a list of the Microsoft products affected by these licensing changes:
- Office
- Level A Enterprise Agreements
- Windows Enterprise
- Productivity Servers including Exchange, SharePoint, Skype
- Windows Server Standard
- Windows Server CAL
- CoreCAL
- ECAL
What will changes to these products and Microsoft’s licensing and pricing structure mean for your business? Here is a breakdown of the major updates you need to know about:
Removal of Programmatic Volume Discounts
Microsoft’s licensing changes have established a “single, consistent starting price” across all programs. Therefore, programmatic price Level A discounts for EA/SCE/Select Plus/MPSA and Level C discounts for Open/Open Value no longer apply. These levels are still available for purchase; there is simply no longer a discount for purchasing in high volume.
However, coverage and platform discounts will still exist for EA Level A customers. Microsoft also claims they currently have no plans to change levels B-D, which are meant for larger customers with more complex requirements. For Open programs, Level C has been completely removed as of October 2018.
These changes were made with the goal of allowing organizations to purchase based on their specific needs rather than price. It seems as though this change is also an attempt to drive more mid-market customers to purchase via a CSP partner rather than small Enterprise Agreements (EAs).
Commercial Price Increases
At renewal, Level A MPSA, Select/SelectPlus, and Enterprise Agreement customers will see prices rise by just under 4%. Level C Open License, Open Value, and Open Value Subscription customers will see a price increase of about 2%.
Government Price Increases
Most Government customers use Level D, which will see a price increase of 4-6% for Online Services. Government customers using the Open AND MPSA programs will see Online Services prices increase by 3-18%.
Software prices will not be impacted by this programmatic change in EA, Select/Select Plus, and MPSA. However, there will be a phased implementation of this new pricing structure for Government customers in Open with the hope of helping government organizations mitigate the impact of these higher Online Services costs.
Changes to Office 2019
The one-time purchase price for Office 2019 has increased by 10%. This will include Office client, Office server products, and the Core/Enterprise CAL bundles across all commercial agreements and academic agreements (but excludes the Enrollment for Education Solutions agreement).
The Office 2019 program also includes a variety of other changes. For example, it will only run on Windows 10 and support Click2Run (C2R) installations. It will also only come equipped with a 7 year support lifecycle (a change from the previous 10 year support agreement). Additionally, effective October 2020, only Office in mainstream support will be able to connect to Office 365 services.
Changes to Windows Server
Windows Server 2019 Standard edition will see a 10% price increase. The RDS Device CAL will increase by a whopping 30%. This will bring its pricing structure in line with the User CAL, another push to make the per User licensing option more attractive to buyers.
Changes to Windows 10
Windows 10 product names have slightly changed. Instead of using per user/device suffixes, the label “E3” will now signify when a product has been licensed per User. Windows 10 Enterprise E5 per Device is no longer available, and the pricing of Windows 10 Enterprise will be raised to match the pricing of Windows 10 Enterprise E3.
Overall, most of these changes were made to better align various aspects of Microsoft’s licensing. This was done with the hopes of reducing inconsistencies and confusion for its customers and partners.
These changes also give customers an incentive to purchase through the Cloud Solution Provider (CSP) program. Microsoft wants to increase the amount of customers in the cloud and licenses per user through the Office 365 subscription-based model, effectively moving users away from one-time purchase Office software.
By making it more complicated and expensive for organizations to continue using a suite version of Office software, those who have been hesitant to make the switch to the subscription model of Office 365 are now likely reconsidering. If you’re in the same boat and are not willing to spend an additional 10% on your Office software bill, migrating to Office 365 can be a powerful solution to help you offset software costs and experience all the benefits of subscription-based services.
If your business is ready to transform into a modern digital workplace built on the Microsoft 365 platform, reach out to the experts at Protected Trust today. We can help you migrate from Office software to Office 365 with convenience and ease!
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