Microsoft Licensing: Why The Disconnect On Software and Cloud?

By Dave Sobel

I’ve been thinking about Microsoft licensing a lot recently.

Besides potentially giving me a headache, there’s a good reason for this. Microsoft has a lot of licensing programs. Open License, Enterprise Agreements, Service Provider Licensing Agreements, OEM, Retail, Select… there are a lot of different ways to buy Microsoft.

There has been a considerable amount of partner angst over licensing. The criticism tends towards discussions of how complicated the licensing programs are. Rallying cries of "Too many SKUs" or "Too confusing" from partners have dominated the discussion around licensing.

Microsoft’s answer has been that they provide different ways for different types of customers to buy from them. The licensing is flexible to allow for all the different ways someone could buy, and because of that, there may be added complexity. Some partners still shook their head ruefully, but I’ve always agreed with this statement. Licensing is complicated, because it allows for the various kinds of customer and partner business models that support it.

Now let’s move into Microsoft’s Cloud Offerings, and specifically Office 365 and Windows Intune. They have one license model. The customer buys directly from Microsoft. That’s how it’s licensed.

I’m surprised we haven’t looked at the licensing. For years, Microsoft has told us that flexibility is the strongest way to go to market. Flexible licensing models allow for different partners and different customers to buy any way they want, and build business models they want. Yet cloud is different?

Why is selling cloud different from selling software so dramatically? Is there going to only be one kind of partner business model for cloud? Only one way of consuming it? Only one way of building solutions on it?

This isn’t a new discussion – BPOS pricing and approach was announced two years ago, and discussed "to death" at WPC in New Orleans. It was addressed on stage at WPC in Washington DC when Ballmer dismissed it with "Blah blahblah" about billing. And here we are, approaching another WPC with the same approach.

Either Microsoft has been wrong previously, and licensing didn’t need to be that complicated, or they’re wrong now, and cloud licensing needs to be as varied and diverse as on premise licensing. One-size-fits all has not been their business model previously, and I’m surprised it’s lasted as long as it has so far.

What’s the real story with licensing?

Dave Sobel is CEO of IT solution provider Evolve Technologies in Fairfax, Virginia, just outside of Washington DC, a managed services provider delivering solutions in the SMB space.

This article was originally published on 2011-07-07