On-premises and cloud users, prepare to be adjusted
Microsoft has announced tweaks to its Volume Licensing programmes from 1 October, under which existing plans will be renamed, discounts removed and prices “changed”.
For “changed”, read “increased”.
In a blog post published by Microsoft during the excitement over previews of its on-premises server applications, the money-making Windows slinger pointed to its Modern Commerce strategy as the driver behind the changes (which it admitted related “specifically to offer pricing and discounting”).
Microsoft’s Modern Commerce platform is aimed at making things simpler to understand with a consistent set of offers through three distinct channels (Redmond’s partners, customer self-service, or Microsoft assisted). The current system is more akin to a Heath Robinson fever dream.
However, simplification appears to cost.
Programmatic volume discounts will be disappearing, resulting in a potential increase of between 2 and 3.8 per cent. Government pricing is being “aligned” with the lowest commercial price, which sounds great, but hidden away in the FAQ (PDF) is the admission that government customers could actually see a hike of 6 per cent in Enterprise Agreement and up to 18 per cent in some online services. Ouch.
On-premises versions of Office 2019 will also receive the touch of the cash fairy’s magic money wand, with prices going up by 10 per cent. Windows 10 Enterprise E5 gets the chop, and the E3 offering will be per-user only. Windows 10 Enterprise will also see its price increased to match that of E3.
Confused? Microsoft is keen to justify the changes as a way to clear up that confusion and make pricing consistent and transparent over its various licensing programs. The fact the prices seem to be increasing is, we’re sure, just coincidence.
The Register had a chat with licensing specialists Cloud Optics to get their take on the changes. Ian Camino, MD of the consultancy, warned that due to the affected products, clients would struggle to avoid the changes and that budgets would likely need reassessment.
As far as the costs were concerned, Camino reckoned that “with the removal of programmatic discount from EA/MPSA level A and Open Level C alongside the price increases, our early analysis suggests it could actually be nearer a 15 per cent hike. Clients will need to wait until September to really assess the actual changes.” Once again, ouch.
He went on to say that Microsoft looks like it has SMBs in its crosshairs: “For customers below 2,400 users, which accounts for a large volume of clients, this will likely force cuts in projects or slow adoption of new Microsoft technologies to keep paying for what’s already in use.”
As for Microsoft’s goal of making it easier for customers to pick and choose what they want, Camino commented: “The changes are aligned to device pricing metrics rather than user, which is aimed at driving clients towards Office 365 rather than provide true choice. This dynamic is consistent with overall price strategies that we have witnessed since the introduction of Office 365.”
In response, a Microsoft spokesperson reiterated Redmond’s position, telling us: “Microsoft is improving the way it does business with customers and partners as a part of its Modern Commerce strategy. Effective October 1,2018, we will begin to adjust pricing to provide more consistency and transparency for our commercial customers.” ®
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