Microsoft Partners, Responding To Competitors’ Complaints Of New License Transfer Policy, Say All’s Fair In Cloud Wars

Cloud & Services Home News Software

by | August 10, 2019

Amazon and Google execs have derided an updated policy closing a loophole for transferring on-prem Microsoft Windows and SQL licenses to cloud providers. Microsoft partners see hypocrisy in their complaints and encourage the software giant to continue leveraging its competitive advantage.

While Microsoft’s recent licensing benefit changes have provoked harsh words from Amazon and Google executives, Microsoft partners are happy to see the software giant pressing its advantage to drive Azure cloud adoption in whatever ways it can.

“Personally, I think Microsoft is just being aggressive about driving their solutions,” said Matt Scherocman, president of Interlink Cloud Advisors, a Microsoft partner based in Cincinnati.

That’s the smart move.

“They know that whichever platform gets the first workload from a customer, it’s way more likely to get the second and the tenth workload,” Scherocman said.

Microsoft announced changes to its Bring Your Own License policy on Aug. 1, claiming the advent of dedicated, single-tenant servers offered by major cloud providers “has blurred the line between traditional outsourcing and cloud services and has led to the use of on-premises licenses on cloud services.”

After Oct. 1, new Windows Server and SQL Server licenses, except for customers purchasing Software Assurance plans, won’t be transferrable to dedicated instances in Alibaba, AWS, Google or, for that matter, Azure clouds.

But customers can get a discount with the Azure Hybrid Benefit that dramatically reduces the sting of licensing changes when migrating Windows Server and SQL Server from corporate data centers to Microsoft’s public cloud.

The change in the licensing benefit prompted derisive tweets this week from Amazon CTO Werner Vogels and Google Cloud President Robert Enslin, who alluded back to the strategies Microsoft employed in the 90s.

AWS Vice President Sandy Carter posted on LinkedIn, a Microsoft property, that the licensing change certainly seems “like they’ve been taken from the old guard software vendor playbook.”

In response, a Microsoft spokesperson told CRN via email: “we believe in and will continue to give our customers choice in where they run their Microsoft software, including with other major cloud providers.”

The policy of allowing transfer of licenses to hosting outsourcers was never intended to apply to clouds. But as the hyper-scalers introduced dedicated, single-tenant options, those became a loophole for invoking BYOL, Microsoft partners told CRN.

Those partners see hypocrisy in the outcry of competitors.

“Microsoft is leveraging their position in the installed base for a competitive advantage,” Allen Falcon, CEO of Cumulus Global, a Microsoft partner based in Westborough, Mass., told CRN.

That’s not so different to what Amazon and Google have done in the past.

Falcon cited Amazon entering a deal with Toys R Us to be an exclusive seller in exchange for using its e-commerce site back in 2000. That lasted until “Amazon learned how to do toys and started competing.”

And Google hasn’t been shy to leverage its Search dominance in benefit of other businesses, he noted. An FTC investigation even caught Google manipulating search rankings to push its own products over competitors.

“Microsoft is able to offer existing customers preferred pricing for staying with Microsoft,” Falcon said. That just falls in the category of “pricing competition”—which doesn’t just have to be about the cost of renting a CPU or RAM.

David Barter, senior Microsoft practice director at GreenPages, a solution provider based in Kittery, Maine, echoed that sentiment.

“Apple and Oracle and all the big tech giants around the world have made it abundantly clear that they’re self-serving,” Barter said. “Amazon and Google Cloud are not any different.”

Amazon has achieved its current market position by leveraging the ability to provide state-of-the-art e-commerce hosting on a platform easy to consume and manage. And Google has often leaned on its powerful Search engine to spur cloud sales, Barter said.

Microsoft’s strength isn’t in Search (despite Bing) or improving the e-commerce experience. But where the Redmond, Wash.-based tech giant shines is the breadth and popularity of its enterprise software portfolio.

“If you’re Microsoft, is that a bad thing? Is that against the rules?” Barter asked. “Everybody has an advantage. Let’s play the advantage.”

Some Microsoft-aligned solution providers don’t really see much of an impact in the licensing benefit change anyway.

The loophole that allowed transferring licenses to clouds, as long as they were dedicated servers, was not one most New Signature customers cared about, said Reed Wiedower, CTO of the Washington, D.C.-based Microsoft partner.

“Most of the organizations who are taking advantage of the public cloud aren’t trying to do so via their existing license model,” Wiedower said. “If anything, the cloud seems to have attracted customers who are more interested in OpEx expenditures.”

Microsoft also downplayed the changes that prompted a backlash from competitors.

Because it only limits transfers to dedicated cloud services, the updated policy will not impact “the vast majority of customers who are multi-tenant and upgrade to new server versions gradually,” its spokesperson told CRN.

The Azure Hybrid Benefit, on the other hand, might prove extremely significant, as large SQL deployments get very expensive very fast, the same partners told CRN.

Barter, at GreenPages, said that option to buy flexibility in transferring existing licenses is a valuable tool in the arsenal of a reseller.

“As a practice leader here at GreenPages and an evangelist, it allows me to give the customer more than one option,” Barter said. “They don’t feel like they’re being forced into buying something they’ve already paid for.”

Scherocman, of Interlink, also sees Azure Hybrid Benefit as the centerpiece of Microsoft’s strategy to leverage its primary products—SQL and Windows Server—for advantage in the cloud wars.

And that’s just what he wants to see out of the tech giant his company partners with.


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