Azure Hybrid Use Benefit – Not As Beneficial As You Might Think!

This is a licensing post. I will not be answering any licensing questions. If you have any licensing questions then please send them to an account manager at your licensing supplier. No exceptions!

Microsoft has been making quite the fuss about a new benefit of Software Assurance for Windows Server called Azure Hybrid Use Benefit.

Whether you’re moving a few workloads, migrating your datacenter, or deploying new virtual machines (VMs) as part of your hybrid cloud strategy, the Azure Hybrid Use Benefit (HUB) provides big savings as you move to the cloud.

You can make use of this licensing benefit in a few technical ways when deploying VMs in Azure. You can choose the [HUB] images from the Marketplace (manually or via JSON/PowerShell) or you can check a box in the Create Virtual Machine blade:


The implied message is that for every machine you have covered by SA, you can get 40% (or more) savings by being charged for the VM minus the cost of Windows (Linux VM pricing). Well, that’s sort of true. When you dig a little deeper you’ll learn a few things.

Standard Versus Datacenter

The SA benefit of HUB works differently if you have Std or DC licensing. If you have a Windows Server Std license with SA then you can use this benefit when moving the licensed machine to Azure. You’re not getting anything extra here … just the ability to move your license.

If you have Windows Server DC license with SA, then you can use this benefit to deploy additional Windows VM licensing in Azure.

What Do You Get?

The devil is in the details.

For every 2-processor Windows Server license or Windows Server license with 16-cores covered with Software Assurance, you can run either of the following at the base compute rate:

  • Up to two machines with up to 8 cores or
  • One virtual machine with up to 16 cores.

Let’s assume that you have licensed a new host with Windows Server 2016 with SA. That host has 16 cores. From that license we are getting HUB licensing for Windows Server for either:

  • 2 VMs with up to 8 cores each, e.g. a pair of DS2v2s OR
  • A single VM with up to 16 cores.

If you bought WS2016 Std, then all you get is the ability to move either that physical machine or 2 VMs from that machine (AND decommission the host) to Azure.

If you bought WS2016 DC, then you think “that covers all my VMs”. Yes; it does for on-premises licensing. But HUB still only gives you the above 2 options for the physical host’s license. The VMs don’t have licenses, so you get the same amount of licensing as Std edition, but at least you can keep your on-premises stuff and add new HUB VMs in Azure.

Bigger VMs in Azure

If you need more cores in your Azure VMs then you can stack licenses. You can take 2 on-premises licenses and “stack them” to get 16 + 16 cores for an Azure VM with up to 32 cores.


I haven’t completed a deployment of a HUB VM, so I am not 100% sure of this, but I don’t think that there is anything more than an honour system to this type of licensing. It’s up to you to verify that you have correctly licensed your Azure VMs. Azure is probably the next frontier for licensing auditors, so don’t fall into any easy traps that they can roast you in.

Don’t Buy SA for HUB

Don’t get me wrong, HUB is a nice add-on but it’s not going to make a huge difference for companies with lots of virtualization. It’s a nice perk but it’s not why you attach SA to your hosts. You do that for lots of other reasons, such as Cold Server Back UP Recovery, upgrade rights, adding mobility to OEM licenses, and more.

Got Any Questions?

I won’t be answering them. Please ask an account manager at the supplier of your licensing.

Microsoft Increasing Prices in the UK

Microsoft announced late last week that prices will be increasing in the UK from January 1st. This has been expected for a while in the channel after the crash of Sterling versus the Euro and the US Dollar (the currency that Microsoft is based on).

FYI, Microsoft has price lists in different currencies for different markets. Those pricelists are based on what Microsoft expects the local currency to do versus the Dollar in the coming period, and Microsoft tries to keep things steady for as long as possible. But every now and then, something happens and a currency crashes and Microsoft starts to lose money, and they need to rectify things. June 23rd was that day.

The UK voted (insanely in my opinion) to leave the EU (I might think the EU has strayed wildly from what citizens want but I wouldn’t leave). On June 22nd, £1 = $1.467790822 USD. Today, £1 = $1.22280, roughly a 16% drop. Let’s put that in some real terms.

A licensed host (the minimum of 16 cores) running Windows Server Datacenter costs roughly £5,200 on Open NL, the most commonly quoted pricing method for MSFT software. On June 22nd, Microsoft earned, in US Dollars, $7,632.51 from that sale. Today, Microsoft makes $6,358.60 from that sale. That’s a drop in revenue of of $1,273.95 from a single sale.

So what’s happening? Microsoft is increasing prices as follows:

  • On-premises software: 13%
  • Cloud services: 22%

Before you start screaming at Microsoft, I’d recommend that you redirect your blame elsewhere. Microsoft did not sabotage UK Sterling and Microsoft is not a charity. Instead, look at those who did burn the Bank of England, namely the politicians, those who voted for Brexit, and those that were too lazy to vote.

The August 1st Microsoft Price Increases Continue – Office 365 & More

I learned today that the price of Office 365 is increasing, at least in the Euro zone. The breakdown is as follows:

  • Every SKU except E3/E4 is going up by 10%
  • E3 and E4 are going up by 8%
  • 365 Pro Plus is not increasing

As well as that we will see other online prices going up:

  • CRM Online by 10%
  • EMS by a whopping 26%

We already know that user (not device) CALs for on-prem products are going up by roughly 13%:

  • Core CAL Suite
  • Enterprise CAL Suite
  • Exchange Server Standard & Enterprise CALs
  • Lync Server Standard, Enterprise, & Plus CALs
  • Project Server CAL
  • SharePoint Standard & Enterprise CAL
  • System Center Configuration Manager
  • System Center Endpoint Protection
  • System Center Client Management Suite
  • Windows Server CAL
  • Windows RDS & RMS CAL
  • Windows MultiPoint CAL

VDA pricing is going up by 9% approximately.

My advice: if you’re buying soon then buy now, and enter a volume license agreement that locks in your pricing for X years. A good distributor or LAR can give you the correct advice. That’s fine for the on-prem stuff, but cloud services are subject to fluctuation, even in volume licensing.

To any “journalist” that decides to quote this post: my name is Aidan Finn.

As usual, I will not be answering licensing questions. That’s the job of your reseller, LAR, or distributor.

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VMware Increasing Pricing For Partners

I was forwarded an email today from a VMware distributor that informs VMware authorised partners that their prices are going up.

No customer buys software directly from the big software vendors. Typically the path is either:

  • Manufacturer > Distributor > Reseller > Customer
  • Manufacturer > Large account reseller > Large customer

Each link in the chain (or channel) makes a small percentage. There is a “price list” at the top of the chain, but that is often discounted. Discounts are applied to large deals, and that discount can vary depending on sales targets for the product, what is included in the deal (adding more can sometimes reduce the original price), the time in the sales cycle and the size of the deal. In the case of VMware, few ever pay the prices listed on their website.

This is the email sent out to VMware authorised partners:


VMware are reducing those discounts, giving VMware more earnings and reducing the profitability of VMware software to partners.

Do note, that any reseller that has a business plan to make profit from licensing needs to sell A LOT of licenses. Real profits for resellers come in services, not in s/w or tin.

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Another Reason to Use Azure IaaS – System Center Licensing

I just had a conversation with a customer about a Hyper-V/System Center deployment that they are planning. They have multiple branch offices and they want to deploy 2 VMs to each, and manage the hosts (hardware included) and guest OS/services with System Center. The problem was: the cost of System Center – not a new story for SMEs, even larger ones, thanks to the death blow served by MSFT to System Center sales in the SME space in 2012.

This customer was looking at purchasing 1 Standard SML per site. The lack of density was increasing costs – using a centralized deployment with Datacenter SMLs would have been more cost effective. But they needed VMs for each site.

But I knew a trick:

Customers can use the license mobility benefits under Software Assurance to assign their System Center 2012 license to a Windows Server instance running on Azure. A System Center Standard license can be used to manage 2 VM instances; a System Center Datacenter license can be used to manage 8 VM instances.

What if the customer did this:

  • Deployed the VMs in Azure instead of on-premises Hyper-V
  • Shared the services via RemoteApp
  • Managed the guest OS and services using Datacenter SMLs, thus getting the cost/density benefits of the DC license.

As it turns out, the solution wasn’t going to work because the regional sites suffer from Irish rural broadband – that is, it sucks but not enough to download faster than a few MB, let alone upload.

But this is something to keep in mind for getting density benefits from a DC SML!

Altaro – Webinar & eBook On Microsoft Licensing For Virtual Environments

Altaro has published a free e-book called Licensing Microsoft Server in a Virtual Environment. I know this is a hot topic because it’s one of this site’s top search results every month. The ebook, written by Eric Siron, covers:

  • The concept of Microsoft licensing in a virtual environment
  • Windows Server, Hyper-V Server 2012 & 2012 R2 licensing
  • Difference between keys & licenses
  • Understand license transfers, stacking & implications for a cluster
  • Mapped example diagrams of common virtual licensing environment

Altaro is also running a webinar on this topic on Decentber 4th, featuring fellow Hyper-V MVP Thomas Maurer and Andrew Syrewicze. This webinar will run for 45 minutes with live Q&A, starting at 10am EST or 3pm GMT.

Intel 18-Core CPUs Surely Will Affect Microsoft Server Licensing

Read MVP Didier Van Hoye’s take here.

I’ve been thinking for some time (I think VMware even quoted my blog a few years ago) that Microsoft would eventually switch to per-core licensing for Windows Server. I think the emergence of 18-core CPUs makes that inevitable. Right now, if you want 36 cores, you’re probably looking at using 4 x 10-core CPUs, which is 2 Windows Server licenses (each license covers 2 CPUs). Those new CPUs halve Microsoft’s revenue on the upper end of the market.

I would be surprised if, come April, there isn’t an announcement of a change to Windows Server licensing, in conjunction with the GA of Windows Server “2015” (Threshold) in (maybe) May.

The key things here would be:

  • There must be a smooth transition process – when MSFT switched SQL Server to per-core it was quite confusing for resellers and customers. Note that resellers choosing to work with a good distributor helps out quite a bit here, and in turn helps their customers get best value and stay legit!
  • The price for smaller deployments cannot increase. In my opinion, the cost of Windows Server Standard/Datacenter must stay the same on a machine with 2 x 6-core CPUs before and after the release of Threshold. If one dual-CPU (covering 2 6-core CPUs) copy of WS2012 R2 costs $882, then a per-core license should cost $73.50. We can then license that same server with “WS2015” for 12 x 73.50 ($882).

If Microsoft gets it right, then the transition could be smooth. To be honest, I think it might even simplify licensing – the non-techy people who buy licensing struggle with the per-dual CPU model of WS2012 and WS2012 R2.

However, if the ivory tower residents get it wrong (i.e. those same folks think that only Fortune 1000’s and cloud hosters run servers – kids, drugs are baaaad) then we could be looking at a VMware vRAM type of backlash that would do serious damage to the current hot streak that the cloud OS is on.

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Microsoft Azure Now Available Through Open Licensing

It is August 1st, and today is the very first day that you can buy credit for usage on Azure through Open Licensing. This includes Open, OV, and OVS, as well as educational and government schemes.

How Does It Work?

The process is:

  1. A customer asks to buy X amount of credit from a reseller – the next bit of stuff is normal licensing operations that the customer does not see.
  2. The reseller orders if from a distributor.
  3. The distributor orders the credit from Microsoft.
  4. A notification email is sent out to the customer with a notification to download an OSA (online services activation) key from their VLSC account (used to manage their Open volume licensing). The customer is back in the process at this point.
  5. The customer/partner enters the OSA key in the Azure Account Portal.
  6. The customer/partner configures Azure administrator accounts and credit alerts.

Credit is purchased in blocks of $100. I believe that it is blocks of €75 in the Euro zone. So a customer can request $5000 in credit. They don’t get 50 OSA keys: they get one OSA key with a value of $5000.

Who’s Account Should We Use?

If you are a customer and the MSFT partner wants to set you up under their Azure account, tell them to frak right off. The VMs will be THEIR property. The data will be THEIR property. We have seen this situation with Office 365. Customers have lost access to data for months while MSFT’s legal people try to determine who really owns the data. It is MESSY.

The MSFT partner should always set up the customer’s Azure deployment using a Microsoft Account that is owned by the customer. Additional administrators can be configured. Up to 5 alerts can be configures to send them to the reseller and the customer.

Using Credit

“How much will doing X in Azure cost?” and “How much Azure credit do I need to buy?” will be the two most common questions we distributors will hear in the next 12 months. Ask me and I’ll respond with one of two answers:

  • If I’m in a good mood I’ll tell a consultant to go do some frakking consulting. How the frak am I meant to know what your customer’s needs are? And that’s if I’m in a good mood 🙂
  • If I’m in a bad mood I might award you with a LMGTFY award and make you famous 😀

The answer is based on how credit is used. You buy credit, and everything you do in Azure “burns” that credit. It’s like having credit on a pay-as-you-go (aka “burner”) phone. If you do A then is costs X per minute. If you do B is costs Y per month. Go look at the Azure pricing calculator.

Not all “Azure” services can be purchased via credit. Examples include Azure AD Premium and AD RMS that are licensed via other means, i.e. SaaS like Office 365. Their branding under the Azure banner confuses things.

Credit Time Limits

Your credit in Azure will last for 12 months. It will not roll over. There are no cash-backs. Use it or lose it.

My advice is that you start off by being conservative with your purchasing, determine your burn rate and purchase for X months, rather than for Y years.

Topping Up Credit

You should have configured the email alerts for when credit runs low. If credit runs out then your services shut down. I hope you reserved VIP and server IP addresses!

When you get an alert you have two options:

  • Normal procedure will be to purchase additional credit via the above reseller model. With alerts, the MSFT partner can initiate the conversation with their customer. Obviously this takes a little while – hours/days  (I have no idea because I’m outside of the logistics of licensing).
  • If the customer runs out of credit and the reseller process will take too long or it’s a weekend, the customer can use a credit card to top up their account in the Azure Account Portal. This should be an emergency operation, adding enough credit for the time it will take to top up via the reseller.

Note that old credit is used first, to limit wastage because of the 12 month life of credit.

The Benefits of Open

For the customer, they can use Azure in a controlled manner. You don’t have to buy thousands of dollars of credit through a large enterprise EA license program. You don’t have unmanageable payment via a credit card. You buy up front, see how much it costs, and deploy/budget accordingly.

For the partner it opens up a new world of business opportunities. Resellers have a reason to care about Azure now, just like they did with Office 365 when it went to Open (and that business blew up overnight). They can offer the right solution for customers, private (virtual or cloud), hybrid cloud or public cloud. And they can build a managed services business where they manage the customers’ Azure installations via the Azure Management Portal.

Distributors also win under this scheme by having another product to distribute and build services around.

And, of course, Microsoft wins because they have a larger market that they can sell to. MSFT only sells direct to the largest customers. They rely on partners to sell to the “breadth market”, and adding Azure to Open gives a reason for those partners to resell Azure on Microsoft’s behalf.

Clarifying The Updates Coming To The Windows UI

It appears, judging by Twitter, that lots of people haven’t been following my tweets or reading the stories by Mary Jo Foley and Paul Thurrott. So let’s clear up what is happening in the upcoming updates.

Windows 8.1 (and Windows Server 2012 R2) Update

On April 8th, via Windows Update, you will be receiving updates to:

  • Windows 8.1
  • Windows Server 2012 R2

These updates (6 in the package) will both prepare and update the UI of the OS. These updates are small UI changes to help non-touch users get a better experience. Instead of me wasting bandwidth, go read the comprehensive review by Paul Thurrott.

A less mentioned change is that this update will change how enterprise sideloading works. This feature allows you to push apps by bypassing the official Microsoft app store. I haven’t seen the specifics that I’ve been briefed on printed in the public so I won’t say much more, other than, it’s a great news story with cost reductions.

Windows vNext (Windows 9 or Windows 8.2)

The big changes are coming in the next version of Windows in 2015. These include the return of the Start MENU and the ability to run Universal Windows Apps in windows on the desktop.

What we know about licensing is that:

  • Windows IoT (Internet of Things): A new micro-device OS edition will be free.
  • Sub-9” devices: Windows for mobile devices will be free.

Both of these moves are to encourage OEMs to produce using Windows and to give you cost-competitive devices.

Nothing else is known. However, I continue to advise buying Software Assurance (in the biz) via EA (enterprise) or OVS (small/medium biz) for at least:

  • Server OS (it’s cheaper if you use virtualization, and license per host like you should be)
  • Any server CALs (Windows Server, RDS, etc)

Why? ….

Will The UI Updates Be Back-Ported To Windows 8 or Windows Server 2012?


Does any software business do this? You see Apple doing this? Does Google do this for Android? No.

Pay attention to licensing experts next time around, and get that Software Assurance if you don’t want to be left behind. Feeling screwed? Pity, because you probably screwed yourself by locking yourself into a single version of software.

Windows Server & System Center 2012 R2 Can Be Bought … Now

Generally available (GA) doesn’t mean quite what it used to either.  Although Windows Server 2012 R2 (WS2012 R2) and System Center 2012 R2 were available on the Microsoft Volume Licensing Service Center (VLSC) for Software Assurance (SA) customers, the products could not be purchased.  They can now, as long as you’re in a time zone where it is November 1st 🙂