Expert: New Microsoft Enterprise Licensing Program Could Raise Costs

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Higher costs aren't the only issue with SCE. For enterprises, understanding the licensing changes SCE entails, and figuring out which of its options are the best fit, can be a difficult and time-consuming process, Muscarella told CRN.

"In moving Windows Server, System Center, SharePoint and other products into SCE, there are transition issues involved that are going to be very complex," Muscarella said.

Microsoft also is using SCE as a carrot to lure customers to the Windows Azure public cloud.

SCE includes core infrastructure, application platform and developer platform components, and customers that choose any of these three will get the "best Azure prices based on their infrastructure spend," a Microsoft spokesperson said in an email.

These prices will be "significantly lower" than what Amazon Web Services charges for cloud servers, storage and bandwidth, the spokesperson added.

In the old EA model for Azure, customers had to predict how much capacity they'd be using and pay for it up front in order to get volume discounts. If they went over, they had to pay the full price for Azure capacity, as opposed to the discounted EA rate.

Because there hasn't been a way to track how much capacity they were using, deploying additional virtual machines and importing data was a risky proposition for customers, Tim Hegedus, senior analyst at Miro Consulting, Woodbridge, N.J.-based licensing consultancy, told CRN.

"Microsoft doesn't want to interfere with your ability to run your business, so they have no hard and fast limits," Hegedus said in an interview. "But if you do exceed your limit, you have to pay."

That's one of the big changes with SCE: Customers that go over their commitment will still get the discounted EA rate for Azure capacity. Microsoft also is giving customers new tools for tracking how much Azure capacity they've consumed, and will send automatic notifications when customers approach key usage thresholds.

In a press conference in San Francisco Monday, Microsoft Server and Tools chief Satya Nadella described the new EA terms as a "fantastic" way for enterprises to tap into Azure capacity for backup and disaster recovery for private clouds.

Muscarella sees the Azure discounts as an example of Microsoft's typical strategy for getting products established in enterprises in order to build market share. Microsoft is "almost giving away Azure to customers" in the SCE, he said.

However, Muscarella said the lower discounts customers will be getting from SCE will negate any cost savings customers see from the Azure discounts.

Customers that haven't recently renewed their ECI and EAP have until Nov. 9 to do so before the new SCE terms take effect. Muscarella is advising his customers to renew or risk paying as much as 40 percent more for Microsoft enterprise software in 2014.


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