Cloudy with a chance of Licensing
Latest news on Microsoft licensing, Cloud, and AI
March:
Windows 10 ESU Cloud Managed Requirements updated to state “Intune & Entra ID” as license requirements for user access.
Microsoft Entra ID Governance External Identities rebranded to Microsoft Entra ID Governance for Guests
Azure Arc license restrictions updated for Windows Server
April:
SQL Server & Windows Server Subscriptions on MCA/CSP get rights equivalent to Software Assurance (SA)
Windows 10 Enterprise LTSB ESU added
Microsoft Defender for EndPoint P2 Add-on for M365 E3 added to MCA for CSP
Microsoft Entra ID P2 Add-on for M365 E3 added to MCA for CSP
Dragon Copilot Physician Practice Per User added to MCA for CSP
Microsoft have announced that, from April 1st 2026, CSP subscription products have the full equivalent rights of their volume license w/ Software Assurance counterparts.
The big thing here is that eligible CSP subscriptions now have License Mobility (through Software Assurance) rights – so you can take them to Authorised Mobility Partner clouds – including the Listed Providers i.e. Amazon AWS, Google GCP, and Alibaba.
Eligible server products are:
This was the big remaining difference – it furthers the rise of CSP as an alternative to volume licensing and reduces the scope for Microsoft to be accused of anti-competitive behaviour against the Listed Providers and customers.
See more from Microsoft here – April 2026 announcements – Partner Center announcements | Microsoft Learn
Microsoft has announced “Savings Plan for Databases” – a new option to manage Azure cloud costs, alongside the existing “Savings Plan for Compute”.
Just like the AWS version (announced in December 2025), this helps organisations reduce spend on certain databases while giving additional freedom when compared to Reserved Instances – but, due to the added flexibility, giving lower discount levels.
Rather than committing to a specific service/region etc., Savings Plans allow you to commit to a level of hourly spend that can be applied across a range of services.
Savings Plans for Databases are worth considering when you have a predictable baseline of database spend but still need flexibility in how that spend is consumed. If your environment includes multiple database engines, regions, or services that change over time, committing to a fixed hourly spend can unlock savings without being as specific as with Reserved Instances.
They are particularly useful where workloads are steady in aggregate but variable at an individual service level. If you can reliably forecast a minimum level of database spend each hour, a savings plan can reduce costs while preserving freedom.
A range of database options, including Cosmos DB, are covered with discount levels varying:
It seems these new Savings Plans are available just in 1-year variants and, assuming they follow the same method as Savings Plan for Compute, can be paid for upfront or monthly with no impact to the total amount.
This announcement helps bring Azure to parity with AWS (in this area) and will enable some organisations to make additional savings. As always, be sure to work out how it will apply to your specific contract and scenario.
See more from Microsoft here – Announcing savings plan for databases: flexible savings for modern, evolving workloads | Microsoft Community Hub
Microsoft 365 E7 is here!
There have been rumours for years but now it is official, there is a new member of the M365 family…the Frontier Suite as Microsoft are calling it, ready to bring humans and agents together.
The release date is May 1, 2026 for $99 per user per month. The separate pricing will be (after the July 1st price increase) $60 for E5, $33 for M365 Copilot, and $15 for Agent365 so E7 represents a saving.
This is a quick post to get this info available – I’ll do further posts looking more at Agents 365, exactly what’s included in E7, and how pricing stacks up etc.
See more from Microsoft:
Introducing the First Frontier Suite built on Intelligence + Trust – The Official Microsoft Blog
Partner Blog | Introducing Microsoft 365 E7: The Frontier Suite | Microsoft Community Hub
Leading Frontier Firm transformation with Microsoft 365 E7: The partner opportunity
Revenue = $81.3 billion (up 17%)
Net Income = $38.5 billion (up 60%)
Microsoft Cloud = $51.5 billion
As it has been every quarter for many years now, more big increases across the board as Microsoft continues to grow. They have RPO (Remaining Performance Obligation) of $625 billion, an increase of 110%, which indicates a lot of multi-year agreements have been signed. This huge backlog of guaranteed revenue likely means that Microsoft aren’t as bothered about your order/renewal as you might like them to be…making discounts harder to come by for many customers.
Yes!
Satya Nadella, Microsoft CEO said:
“We are only at the beginning phases of AI diffusion and already Microsoft has built an AI business that is larger than some of our biggest franchises”
“We are pushing the frontier across our entire AI stack to drive new value for our customers and partners.”
And devoted the majority of his time on the earnings call to discussing AI, both software and hardware.
Additionally, Q2 saw commercial booking increase 230%, “driven by Azure commitments from OpenAI and Anthropic”. Further more, Perplexity have also signed a $750 million deal with Azure – https://www.msn.com/en-us/money/other/perplexity-inks-microsoft-ai-cloud-deal-amid-dispute-with-amazon/
Revenue = $51.5 billion, an increase of 26%
Dynamics 365 revenue increased 19%
Microsoft 365 Commercial cloud revenue increased 17% with ARPU (Average Revenue Per User) driven by E5 and M365 Copilot.
Microsoft 365 Copilot seats added increased 160% year on year in FY26 Q2 (Oct – Dec 2025) taking them to 15 million paid seats. Of course, how many of those are being used – and being used well – is a different question entirely.
Tracking and understanding ROI of AI investments isn’t as high a priority for most organisations as it should be. This really is an areas where ITAM & FinOps professionals can help organisations take a deeper, more data driven approach to AI procurement and value. I wrote this over 2.5 years ago – https://cloudywithachanceoflicensing.com/2023/07/21/microsoft-365-copilot-pricing-and-licensing-strategy/ – and I don’t think much has changed tbh.
Revenue = $32.9 billion, an increase of 29%
Azure increased by 39% (down from 40% in the previous quarter) but gross margin on cloud declined slightly. Market analysts were hoping for higher Azure growth so this perceived miss was partially responsible for a drop in Microsoft’s stock after the announcement.
They are also concerned that the huge amount of money Microsoft are spending on CAPEX related to AI datacentres etc. isn’t generating ROI fast enough.
Microsoft’s results underscore that licence management, cloud cost control, and financial governance are now inseparable, particularly as AI accelerates both consumption and complexity.
For ITAM and FinOps leaders, Q2 FY26 is less about Microsoft’s growth and more about the operational response it demands: proactive review of AI and cloud commitments, tighter contract scrutiny, and implementation of usage intelligence.
Organisations that align ITAM and FinOps processes to anticipate consumption variability and optimise spend can mitigate financial risk while maximising value from licences, cloud services, and emerging AI capabilities. Success will increasingly depend on granular monitoring, AI-informed analytics, and governance tools that bridge licensing, cloud, and financial metrics.
See more here – FY26 Q2 – Press Releases – Investor Relations – Microsoft
Flexera have kicked 2026 off with a bang!
They’ve acquired both ProsperOps and Chaos Genius – further adding to their FinOps portfolio after their recent acquisition of Spot from NetApp…and their 2018 acquisition of RightScale of course.
ProsperOps focuses on automated cloud commitment and resource management while Chaos Genius focuses on automated savings and management of Databricks and Snowflake costs.
The convergence of software spend is here and getting bigger. Whether something is on-prem, SaaS, Cloud, Data Cloud, AI etc. matters less and isn’t always easy to define as more and more services span multiple billing models. For customer organisations being able to see technology spend holistically is more important than ever and these purchases give Flexera some real end to end software spend coverage from on-premises through SaaS and Cloud.
Some orgs will prefer to go with multiple point products, which is a perfectly viable option that can work better for certain types of business. Others prefer a platform – one foundation that gives the info they need across the business – and Flexera are, in my opinion, probably the leader in that space now. Adding Databricks and Snowflake cost management into their portfolio is a great move and puts them at the forefront of conversations around boardrooms…
The Flexera announcement is here – https://www.flexera.com/about-us/press-center/flexera-expands-its-finops-solution-with-agentic-and-ai-enabled-cost-optimization
Microsoft have (quietly) retired the Power Apps per App SKU.
They’ve not made an announcement, they’ve simply removed it from the January 2026 licensing guide.
Update: 14 days later, they finally made an official announcement here:
https://www.microsoft.com/en-us/licensing/news/power-app-per-app-end-of-sale
If this license is in use within your organisation, be prepared for changes at your next renewal. It’s still showing on pricelists as it will be available to existing customers until their next renewal but if you haven’t bought any already, you’ve missed your chance.
Sticking with licenses will mean a move to Power Apps Premium, which will be a price increase.
Alternatively, you can move to Power Apps Pay As You Go (PAYG) which is going to be Microsoft’s preference as they want as many customers on consumption billing as possible.
“Azure AI Foundry” renamed to “Microsoft Foundry” – a common move
Microsoft Security Copilot SCU included in M365 E5 – read more here:
Microsoft Defender Experts Suites P1 & P2 added. Can be added to:
Microsoft 365 E5
Microsoft Defender + Purview Suite FLW
Microsoft Defender Suite
Microsoft Defender Suite FLW
As part of their twice early price harmonisation efforts, Microsoft have announced price decreases for “Commercial Cloud” products in certain European currencies from February 1st, 2026:
Cloudy with a chance of Licensing 