Microsoft Raises Some Enterprise App License Prices by 15 Percent

Microsoft says it is raising the price of Client Access Licenses (CALs) for certain server-based products such as Lync, SharePoint, Exchange and others because workers are accessing those programs from a growing number of end-point devices.

The price increases taking effect Dec. 1 apply to licenses granted for on-premise deployment on a per-user basis, but not to licenses sold on a per-machine basis. According to an analysis from the group Directions on Microsoft, which is independent of Microsoft, the per-user licenses can still be more cost-effective, even at a higher price, because they allow one user to access the applications from a number of devices. This is typical these days as workers bring their own devices to work as well as work on company-owned machines.

The 15 percent price hike only applies to CALs and not to client management licenses (CMLs) for handling the management of client devices using Microsoft System Center, or to Subscription Licenses (SLs) for running computations on data residing in Microsoft data centers on a subscription basis. CALs are perpetual licenses that are only paid for once.

The 15 percent price hike also doesn’t apply to enterprises that have signed volume license agreements with Microsoft because those deals lock in their pricing for a number of years, Directions of Microsoft explained. In addition, customers participating in the Software Assurance (SA) program are insulated from the price hikes through the end of their current SA terms. Also exempt are academic and charitable institutions.

For those reasons, the impact of the 15 percent jump should be blunted somewhat, said Rob Horwitz, research chair for Directions of Microsoft. He hasn’t heard many complaints from enterprise customers on the price hikes, but expects to receive some feedback when he appears at one of a series of Microsoft Licensing Boot Camps that Directions will be hosting next year, starting with one in San Diego on Jan. 31, 2013.

News of the price hikes has been spread mostly by software vendors, including large account resellers (LARs) such as SoftwareOne in the UK.

“It is clear there has been an explosion of consumer devices which are proliferating rapidly into business,” SoftwareOne explained in a Q&A document shared with its customers. “Microsoft believes, on average, there are three or more devices per information worker employee in companies today.”

That is what makes a per-user license more cost-effective than a per-machine license.

Horwitz says he doesn’t think the CAL price hikes alone will prompt enterprises to shift to a subscription software-as-a-service model for software from on-premise, but it is just one of several factors driving the move to subscriptions.

Besides the BYOD trend and the proliferation of end-point devices that one employee uses during the workday, Microsoft wants to push the subscriptions to move enterprises off of dated software platforms.

“Microsoft’s biggest competitor is not Google or IBM, it’s Microsoft from a few years ago,” said Horwitz, addressing what he calls Microsoft’s “good enough” problem.

It’s hard to convince some users to move off older software that works just fine. That’s why many businesses still run Windows XP, Office 2003 or 2007, he said.

Another issue with legacy on-premise software is dealing with piracy and other license compliance restrictions on the users that disappear when a company goes to a subscription model with the appropriate version of the latest software delivered to the customer through the cloud, such as Office 365.

Other server-based apps affected by the price hikes include Windows Server 2012, Exchange Server 2013, Project Server 2013 and Visual Studio Foundation Server 2012.