Updated Microsoft licensing terms for dedicated hosted cloud services

As per the Microsoft announcement on August 1. Microsoft will change the licensing terms for dedicated hosted cloud services per October 1. 2019.
Under the current licensing terms customer are allowed to use their on-premises software licenses with servers dedicated to their use, even if those servers are under day-2-day management and/or located at a Service Provider premises. This will change for some occasions.

Dedicated use
The current licensing terms in the Product Terms states that software licenses can be used on customers’ servers and desktops. When the customer move their hardware to a third party, this is still allowed. When the customer has virtualized workloads (virtual servers as an example) and move those to hardware dedicated to customers’ use in a datacenter, this is still allowed. When the hardware isn’t dedicated to customers’ use, but shared with other organizations, moving those virtual workloads is only allowed under License Mobility through Software Assurance. Hence, the customer needs active software assurance on their licenses and it is only allowed for certain products (such as Exchange Server, SharePoint Server, SQL Server and some others).

Listed Providers
What will change on October 1. 2019 is that for some listed providers, the right to assign licenses to third party hardware dedicated to customers’ use will stop. As of that date customers moving their virtualized workloads to dedicated hardware in the datacenters of the listed providers can only do so under License Mobility through Software Assurance, which – again – requires active Software Assurance. These are the (current) Listed Providers:

• Amazon Web Services / AWS
• Alibaba
• Google Single Tenant
Microsoft Azure Dedicated Host

For any other Service Providers where customer wants to move their virtual workloads to there will be no change.

The impact
According to Microsoft, customers’ who purchased licenses before October 1. 2019 can keep using these licenses, even with the Listed Providers dedicated hardware. However, licenses purchased on or after October 1. 2019 will be subject to the updated licensing terms for dedicated hosted cloud services and cannot be used. Customers who want to use their licenses with that scenario must buy Software Assurance, or work with the Service Provider to license the software under the Service Provider License Agreement (SPLA).

License Mobility, Software Assurance and the upcoming changes will be covered in the Microsoft cloud and licensing training for Microsoft partners and Microsoft employees (September 18-19, Utrecht, the Netherlands).
Might you require any additional information or need guidance for your specific situation, please do contact one of our software licensing experts.

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