February 2022 Microsoft Licensing Update

Daryl: Good afternoon, everybody. Or good morning, depending on where you are in the world. Alex. Hi. How are you doing?

Alexander: Yeah, not bad. Daryl, nice to see you. Again, online. It's not like I don't see you often.

Daryl: I'm happy to see our audience joining. Today we've got quite a bit on our agenda, and Alex will run the show. As he's the expert and I just ask the questions.

We're gonna go straight in. We'll start with February updates, so please, Alex, it's yours.

Alexander: When I told Daryl, "There's nothing to talk about", he said, "Alex, never say there's nothing to talk about." But honestly, if I look at the February updates, not about your questions, we get lots of questions through our website and LinkedIn. Still, Microsoft, you kinda look at it and think from the licensing standpoint, the news from February is almost like meh.

Nothing interesting. However, there is a significant, I would say, epochal thing which those who follow Microsoft know that it's been getting there. They just needed to update the website. But essentially Software Assurance, Microsoft's maintenance subscription has become purely about licensing benefits.

The last non-licensing benefit is gone. And Daryl, you probably remember when software assurance was introduced. I remember talking in 2009 to Heather Young, who used to work for Microsoft as the head of the entire licensing process. I don't remember the exact position of Heather, but she was taking care of Software Asset Management, licensing, and consolidating all this knowledge.

Her team was behind creating the first Product Terms and Product Use Rights documents, consolidating that data, and ensuring it was streamlined. When I said in one of the conferences in Redmond in the States that Software Assurance is just upgrade rights.

I was pretty young and green at that time. Heather got, I would even say, offended because she said no, we designed Software Assurance, and Software Assurance includes support, vouchers for training, and other things. And it seems like everything that was on top of licensing benefits is now completely gone.

I think we are witnessing a completely new era with Microsoft.

Daryl: First of all, it's not surprising. It was in the works, in my opinion. Again, everything goes back to subscription / online licensing. We know that Microsoft is not moving.

It's moved. Okay? It's happened already. Everything that's still on Software Assurance, license plus Software Assurance, I would almost say it's history. Microsoft wants to get rid of it. It's gonna take years. Because the mass of licenses that are out there is still huge, but it's a gradual change.

Microsoft is saving a lot of money on their Software Assurance benefits by removing them, and it's just an obvious move. It's just part of the overall cloud-first initiative.

Alexander: And they're getting rid of support to sell Unified support.

Daryl: If you don't have a Unified Support contract, you have zero support directly from Microsoft. And we touched on it during our Unified Support Contract Q&A, and I'm very proud of it. Microsoft contacted us directly, pointing out a few sour points from their side that we brought up that maybe they didn't want us to talk about.

And that is the overall increase in Unified support costs year on year. Once your contract renews and your 365 and Azure spending increases, your overall Unified Support contract increases, even though your actual utilization and benefits of the Unified Support don't change. And Microsoft wasn't pleased about that, but that's why we are here. We actually tell you the real story.

Alexander: I would like to clarify something about this whole conversation. She said one thing that made me think whether she was right or not, she said, "You're bashing us. You don't like us." And I wouldn't say it's true. We like Microsoft. I used to promote Microsoft. At the end of the nineties, I moderated multiple online conferences dedicated to Windows NT. So I'm an old Microsoft fan. I like the innovation. I like what they're doing with ChatGPT. I like what they're doing with Bing.

I like what they're doing with Windows Server. SQL Server - I love that product, Always. People were bashing Microsoft, but come on, SQL Server is a fantastic product.

Daryl: We are all for clarity. It's very simple. Clarity. Clarity. Microsoft is an excellent company. We got nothing against Microsoft. Yet, it's complex. You ask two different people at Microsoft the same licensing question. You're gonna get three different answers. Okay? It is complex.

Alexander: True.

Daryl: There must be a room full of just historical licensing terms still in place for certain products.

And even Unified should be simple. It's a complex licensing schema for the support. So we are here to bring clarity. That's all it is. Correct us if we make mistakes, but if we don't, just say it.

Alexander: Yeah. It's all about the truth. The other update from February caught my attention; I wouldn't say it's revolutionary. Microsoft clarified the prerequisites for Universal Print Addons.

What is the Universal Print? It's an Azure service, an online service which helps you consolidate and centralize all your printing jobs through a central Azure point. You need to have Universal Print compatible printers. So, they also should be able to connect to Azure and download the print jobs.

And it's licensed very simply: multiply the number of users with those licenses. And standard E3 and E5 are included. Even F3 is included in those licenses. You may not know that, but you already have five monthly print jobs per user. So you can implement it now. If you have a thousand users, you have 5,000 print jobs.

Very few companies print more, really, these days. It's all digital now. But if you want more, there are Addons, and it works in a straightforward manner. When you have a base license, you can buy Addons.

And otherwise, all the rest is we have updated privacy policies. We did that. I'm not saying it's not important. It affects less than 1% of the clients.

Daryl: I've just remembered something. That we had a conversation with a customer not long ago. Microsoft, you said, makes subtle changes. For example, I don't know how many of our customers actually use Azure Active Directory P1 Kiosk. It's a very light SKU, very lightweight in price. So just for an example, Microsoft is discontinuing that SKU. You cannot purchase it anymore. So that low entry level has gone, and now you need to buy the Azure Active Directory, P1, not the kiosk.

Again, it might not look like a significant change, but if you have a substantial estate and a euro a year and a half uplift, it can easily be tens of thousands of additional spend per year, very easily. That is the kind of subtle change that always goes on. That's why it's really so important just to stay up to date, look at the Product Use Rights, see the changes, and be aware because those small changes have a massive impact on your overall budget.

Alexander: Can I add something to continue what you've just said? A client of ours, a multinational company, is upset with what Microsoft did with Teams Premium.

Whether you know or not, Microsoft, again, at the end of the last year, 2022, said, on top of the Teams that you get for free, pay attention to the wording: Free Teams. It's not free. It's part of your package. You're paying for it. Because you're paying for your Office 365 subscription, whether $6 per user per month or $50 per user per month, you're paying for it.

It's not free, but they're calling it free. Now we have Premium Teams with new features. It's $7 to $10 per user per month, depending on the price. There are new features. What Microsoft did is they removed four features. I don't remember the entire list.

They removed four features from the free Teams and moved them to the Premium subscription, and one of them is critical for multinationals. It's the Real-time Translation. Now we have to pay for it. So you are already paying for your E3. You already negotiated your E5. You worked with us, we got you a discount, and then suddenly you are given what is it, 60 or 90 days to adapt to the changes.

That's the wording. Come on. Maybe it's a very expensive feature. Maybe they're paying lots of royalties to companies that develop that AI that translates. I understand that. It still feels unfair. It still just doesn't fit right in my system of values.

But Microsoft being Microsoft, I'm not saying it's terrible.

Daryl: Just be aware of it. Clarity. Clarity. Clarity.

I wanna jump on a couple of questions, if I may, because I want to keep things flowing.

Window Server VMs. There've been several questions about assigning licenses per VM and multiple licenses per host. Can you maybe just give us some clarity on what's going on there?

Is it enough to assign licenses to each VM? Every VM is less than eight cores.

Alexander: So, with Windows Server 2022, Microsoft introduced per-virtual-machine licensing. If you are familiar with how SQL Server is licensed per virtual machine. It works exactly in the same way. The minimum of eight was mentioned in the question because, unlike SQL, where the minimum per virtual machine is four cores, the minimum for Windows Server is eight cores. So that's the first thing.

Now, instead of licensing the host, you may license Windows Server per virtual machine with the licenses of the most recent version. There are two requirements in addition to the minimum of eight cores. These licenses must be covered with active Software Assurance, and all the CALs must also be covered with Software Assurance, which could be a problem for small businesses.

But assuming that small business has CALs with Software Assurance, all right. In that case, you may assign it there. What I didn't ask that gentleman who asked me this question this morning yet is what the hypervisor is. If the hypervisor, the host's operating system, is Windows Server, you still need to license the hypervisor.

It becomes complicated. But if this cluster is purely VMware, then you may license it per virtual machine. And yeah, you may do that.

Daryl: Do I need multiple licenses per the number of hosts, or is there License Mobility for Windows Server?

Alexander: So this question stems from the requirements for the previous licenses before 2022.

If you license them with, say, license stacking Standard licenses, you need to license every host for all the VMs in the cluster. Wherever they are, it doesn't matter. You would have to multiply it by the number of hosts. Fortunately, Windows Server and System Center now have License Mobility in Server Farms, which means you license it per virtual machine once. Wherever those VMs travel, the license may follow the virtual machines like with SQL Server before. You need SA or a subscription. You need an SA or subscription on the CALs. It's the benefit of the so-called Flexible Virtualization. We have an article about it. We already have a couple of videos on the channel about Flexible Virtualization. We mention it in every recent training. So yeah, if you follow us, you've heard about it.

If you don't, I suggest you go to samexpert.com to the blog and read the article about flexible Virtualization there. It's probably the most positive change in Microsoft licensing in years.

Daryl: The last part of the initial question is whether mixing different licenses on a host is acceptable or not.

Alexander: That is a complicated question that requires a complicated answer. If this question concerns traditional licensing or current licenses without Software Assurance, then by no means don't mix.

A host must be licensed with the same version and the same addition. And I made that mistake before. Microsoft didn't enforce it. It's never been mentioned and still not mentioned in Product Terms. The only place where Microsoft says that is the Windows Server licensing guide. And there's a big question mark, whether, in a proper legal dispute, that's going to stand in court.

But you know, we are not going to court. We're not litigating against Microsoft. We are following the rules. And the rule is, and they enforce it now, every single core of the host must be licensed with precisely the same version and the same edition. And I have my reservations about it. We will release a video about it, a real story of when a company suffered when they learned that.

But it is what it is.

Mixing legacy licenses at the physical level plus adding per VM of the current version is a big question mark. Because of the opinion of the people very close to Microsoft. Not Microsoft themselves, but very close to Microsoft. I won't call names. The opinion is, "that's fine".

It's an opinion. It's the expert opinion of somebody who's informed. It's not explicitly written anywhere unless I missed it.

Daryl: There's a follow-up question. Can you please explain from a HyperV environment again, in the case of virtual machines, do we need extra licenses?

Alexander: I specifically went to the Product Terms page today, to the Windows Server licensing page. Maybe I need to look up Universal Licensing terms, but I don't think so. I tried to find an exception when Windows Server is only used to virtualize other virtual machines. Microsoft actually did have it around 2010-2012.

I may be wrong, but around that time, plus, minus two years, they allowed Windows Server to be free if it was only used for Hyper V as VMware does for ESXi. It's not there now. And in licensing, if something isn't written explicitly, it doesn't exist. So what I didn't check, which makes sense connected to what I just said before, is the Windows Server licensing guide.

I would suggest that you do it yourself. We are going to do it ourselves as well, just to refresh our memory. Maybe Microsoft forgot. They are getting sloppy. I'm sorry. They forgot to update the Product Terms. They forgot to include that in the product terms. But I don't see in the Product Terms an ability, a permission to not license the hypervisor.

Assuming that you could potentially use either Windows Server Standard or Windows Server Datacenter just for the purposes of Hyper V, You would still need to license it for the hardware layer unless we find that exception.

If you wanna stay on the safe side, just completely safe side, then yes, you need to license Windows Server for the hypervisor level. Use ESXi. It's free.

Daryl: Can we license Windows Server VMs hosted on Azure managed by System Center with CIS licenses? Thank you for that question.

Alexander: Such a good question. I don't know the answer. The Product Terms document is entirely unclear, and I asked other experts. Everybody's lost as well.

So, in theory, license mobility for System Center has always existed, but the rules are for dedicated hosts.

There's no clarity around how to bring System Center licenses onto any shared public cloud infrastructures. There's no clarity, really. We have it in our SPLA videos somewhere. Otherwise, just purely for Azure Hybrid Benefit, you can use Core Infrastructure Suite licenses for Azure Hybrid benefit. Still, I'm unsure about managing those machines with your on-premises System Center.

It's not explicitly granted. It's not explained by Microsoft.

Daryl: As we said, licensing is not simple. Very, very complex. Alex, let's take one quick last question.

We want to buy Defender for Endpoint for Server. However, we are confused by the requirement for a combined minimum of prerequisite licenses. The licensing info is ambiguous. We are a small company.

Alexander: Again, Product Terms is bizarrely quiet on this product – Defender for Endpoint Server.

The SKU is there, you can buy it, but then there's a minimum requirement of E5, A5 or 365 E5 security subscription licenses. I think it's 50, you must buy one of those. I want to use it for my servers. Why can't I buy it? There is a way, or what we discovered when we researched this for our client yesterday and this morning.

There's an Azure service. I told you, knowing everything in Microsoft is almost impossible these days, which is called Defender For Cloud For Servers. And there are no minimum limits on Defender For Cloud For Servers. It includes and automatically installs Defender for Endpoint for Servers.

Use the Azure connector called Azure Arc to connect to Azure, and you can also deploy it on-premises. I didn't see any minimal requirements on the pricing calculator. By the way, you won't find that in the Product Terms.

You will only find it in the Azure pricing calculator. Again, Microsoft Defender for Cloud. It's there.

Daryl: Thank you for that Final answer, a very unique question that we received from our customers. We've come to the top of our Q&A session. I wanna, first of all, to thank our participants and the questions raised.

Thank you. It's enriching, it's challenging for us, so we like that. Alex, as always, it's a pleasure, and I'm looking forward to next week.

Thank you very much. Thank you, everybody. See you next week. Bye. Cheers.

Alexander: Bye-bye-Bye.