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Flexible Virtualization Benefit

Microsoft made a massive change to its licensing – Flexible Virtualization Benefit. It affects both end clients and service providers. Microsoft officially rolled it out on October 01, 2022.

This article was last updated on November 04 2022.

What is the Flexible Virtualization Benefit?

Customers with subscription licenses or Licenses with active Software Assurance (including CALs) may use licensed copies of the software on devices, including shared Servers, that are under the day-to-day management and control of Authorized Outsourcers.

The above quote is from Universal License Terms.

Let's explain the term "Authorized Outsourcer" using another quote:

Authorized Outsourcer means any third-party service provider that is not a Listed Provider and is not using Listed Provider as a Data Center Provider as part of the outsourcing service.

Simply, it's any service provider except AWS, GCP, Azure and Alibaba. Azure has its own backdoors and [unfair?] competitive advantages, but let's not discuss them here.

Flexible Virtualization Benefit explained

Suppose you have subscription licenses or licenses with active Software Assurance. In that case, you have a right to ask your services provider to bring those licenses to their data centre and use them in any hosted environment: shared (multi-tenant) or dedicated (single-tenant).

  • There is no limit on the type of environment. Both shared, and dedicated environments are included.

  • All Microsoft software available as subscriptions or licenses with Software Assurance is included.

It seems simple.

Does Flexible Virtualisation replace License Mobility through Software Assurance?

No. LM through SA remains intact. It is the only way to bring your licenses to Listed Providers.

What are the updated BYOL rules?

Here's a high-level view of how we see it in a table:

Bring Your Own License

Before October 2022

From October 2022

BYOL for Volume licenses with Software Assurance

- Permitted to any provider on dedicated hardware.

- Multi-tenant ("public Cloud") BYOL is only permitted to providers with the License Mobility Partner status.

- Permitted to any Authorized Outsourcer. No difference between dedicated and shared hardware.

- AWS, GCP, Alibaba: License Mobility through SA only.

- Azure: License Mobility + Azure Hybrid Use Benefit.

BYOL for Office 365 Apps and Windows 11 VDI

- Permitted to any provider on dedicated hardware. - Multi-tenant ("public Cloud") BYOL is only permitted to providers with the QMTH status.

- Permitted to any Authorized Outsourcer and Azure. No difference between dedicated and shared hardware.

- AWS, GCP, and Alibaba are excluded.

BYOL for Server subscriptions via CSP

- Permitted to Azure via Azure Hybrid Benefit.

- Permitted on dedicated hardware, excluding Listed providers.

- Permitted to any Authorized Outsourcer. No difference between dedicated and shared hardware.

- Permitted to Azure via Azure Hybrid Benefit.

- AWS, GCP, and Alibaba are excluded.

Please let us know if you find any errors in the table above.

More flexibility for Microsoft 365 apps

Before Flexible Virtualization, you could not deploy Microsoft 365 apps to a Cloud provider's datacentre unless they had a rare QMTH ("Qualified Multi-tenant hoster") authorization. That was a severe limitation to Microsoft 365 apps BYOL.

Good news: Flexible Virtualization addressed it. Now Microsoft 365 apps may be deployed with any Authorized Outsourcer.

Windows Server virtual core licensing

  1. You may take (BYOL) subscription Windows Server licenses or licenses with active Software Assurance to any Authorized Outsourcer.

  2. You have an option to license Windows Server virtual machines per virtual core. There is a minimum of 8 core licenses per virtual machine.

  3. It's an option, so the current licensing models remain.

Talk to our Microsoft Licensing experts.

If you want more clarity on how this may affect your Cloud and licensing strategy, please send us your questions using the form below. We'll help you prepare and re-strategize if necessary. 

We expect these changes to positively impact end-customer licensing and digital transformation. We aren't that sure about service providers yet.