Interesting Article On Perpetual Versus Subscription Microsoft Licensing

It’s not often that you come across a Microsoft licensing article that is written in plain English where non-constitutional lawyers can understand complete sentences of the text.  But this one (admittedly a guest post by Amy Konary of IDC) does a very nice job of explaining the differences between Microsoft licenses that you can buy outright and licenses that you can lease.

I didn’t like the idea of the lease model when I first heard about it back in 2002 or thereabouts.  I wondered why you’d want to do it.  But I’ve seen it in the real world, why it’s important, and how it can offer very valuable benefits to customers.

SPLA is a lease model for hosting companies.  Customers have a 1 month commitment to the license, paying for what they use, when they use it.  It’s perfect for the very fluid hosting model, and enables upgrades when new SKUs are available.  SPLA is very specialised licensing and even has it’s own dedicated product usage rights document.

I see a lot of SMEs and service providers to that market who love the Open Value Subscription (OVS) scheme.  There is a low entry cost, enabling the SME to keep cash for business operations.  It’s flexible, enabling the business to true-up or true-down to reflect headcounts.  It builds in Software Assurance giving the customer all the benefits such as Windows Enterprise for the client, free upgrades, and so forth.  And it gives the business peace of mind that they’re probably compliant. 

An example: a company has 100 employees this year and licenses Windows 7 and Office 2010 for them under OVS.  They are entitled to use Windows 7 Enterprise with BitLocker for disk encryption and DirectAccess for a VPN alternative.  In a few weeks when MSVL is updated, they’ll have rights to upgrade to Windows 8 Enterprise, with a simpler/better DirectAccess and Windows-To-Go to enable employees to work from home with company Windows builds booting from a USB 3.0 stick.  Give it another couple of months and they can upgrade to Office 2013 with all it’s new information consumption and touch features.  In the meantime, the company grows to 150 employees and doesn’t have to buy new licensing until their annual report when they true up.  Maybe in a year they hit hard times and shrink to 80 staff.  At the next annual report, they true-down to 80 seats instead of being stuck with 150 perpetual licenses on the books where 70 of them are wasted.  They also have SA so they’re entitled to support calls, MUI, Office roaming rights, TechNet for trial/lab, training vouchers, etc.

For the MSFT partner or service provider, it also means that there’s a reason to talk to the customer on an annual basis, and the customer already has a lot of licensing that can solve problems with some consulting days/hours.

I try to steer clear of the education side of licensing because it is complex.  But there is an OVS in that space which is very cool.  Microsoft licensing in education is already highly discounted.  However, schools under this scheme only have to license full time equivalent employees for the licensing and this covers all the students too.  Imagine a school of 1,000 students with 50 teachers and 20 admin staff (not including cleaners, etc that don’t use PCs).  That school, under this scheme, could license all 1,070 users based on the 70 employees that are full time equivalents and use PCs.  That’s a pretty nice deal!