Tech

Microsoft Taxes AWS and GCP Users for On-Premises Licensing

Microsoft-Tax-on-premise

If you haven’t heard the buzz around Microsoft’s new dedicated host service on Azure that they announced recently, let us fill you in.

Along with that announcement came a change in its on-premise software licensing rules.

This made some of its most widely used enterprise solutions a lot cheaper to run on its new dedicated servers, making comparable options offered by its biggest rivals look much less desirable.

Microsoft positioned this change as “simply a matter of updating its licensing scheme to replace a changing market.”

However, this change gives Microsoft a clear cost advantage over their competitors, enticing users to run Microsoft software on Azure.

The market change Microsoft cited was the gradual replacement of traditional IT infrastructure outsourcing services with public cloud ones.

Traditionally, a customer has been able to use a license for Windows Server, SQL Server, or another Microsoft product in their own data center, including if the data center is managed by an outsourcer.

The change announced by Microsoft was the gradual replacement of traditional IT infrastructure outsourcing services with public cloud ones.

Microsoft-cloud-services

In the older more traditional model, a customer has been able to use a license for Windows Server, SQL Server, or another Microsoft product in their own data center, including if the data center is managed by an outside provider other than Microsoft.

If they move these workloads to dedicated hosts in the public cloud, they have been able to use the same on-premise license without being charged any additional fees.

This treated the cloud provider the same as a traditional outsourcer.

As of October, under the new rules the biggest cloud providers, including Azure, will no longer be treated like traditional outsourcers as far as on-prem licenses are concerned.

In a nutshell, if you want to run on-prem Microsoft software on a dedicated hosted cloud service by Amazon Web Services (Including VMware Cloud on AWS), Azure, Alibaba Cloud, or Google Cloud Platform, you’ll have to pay additional fees on top of the standard license cost.

Microsoft however will give you a large license discount if you bring your own on-prem Windows Server or SQL Server Licenses to Azure.

The discount, called Azure Hybrid Benefit, can cut your total cost for running Windows Server VMs by more than 40 percent!

Here is what people had to say about this change:

An angry tweet from AWS CTO Werner Vogels, who said Microsoft was pulling a “bait and switch” and “restricting freedom of choice.”

With some respondents who promptly tweeted back, pointing out some of AWS’s own business practices that don’t really promote freedom of choice:

AWS itself charges exorbitant network fees for transferring data out of AWS and they are known to routinely turn open source technologies into paid cloud services.

The new licensing rules by Microsoft that began on October, apply to all of their on-premises software being deployedon dedicated cloud hosts sold by the providers listed above.

The new Azure Dedicated Host gives customers dedicated physical servers to run Linux and Windows VMs.

To further entice users to use its own software on its own cloud infrastructure, Microsoft is allowing customers with Windows Server Data-center licenses to deploy as many Windows Server VMs on a single dedicated host as the box can handle, with no additional cost.

About the author

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Denise Elisabeth

Denise Elisabeth is a Graduate Student from Seattle University who has a passion for Technology, Security and Writing.

She loves to dig into News and technology and express clear and concise thoughts on challenging subjects in the Tech and Business realm.

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