Microsoft 365 Copilot is added It’s listed for Enterprise Agreements (as expected) but also the MCA (Microsoft Customer Agreement) and nowhere is there any mention of a 300 license minimum.
I assume it is listed under MCA as it’s available on the MCA for Enterprise Customers aka MCA-E – that is for Enterprise customers buying directly from Microsoft rather than those in the CSP channel. It’s rightly been noted that Copilot isn’t visible on the public pricelists so almost certainly isn’t magically available via CSP but without clarifying text in the Product Terms (or anywhere else), it’s not clear. Nothing like a bit of licensing confusion for one of the biggest product releases in ages!
System Center is added to CSP and the “16-cores” per customer requirement is removed when licensing by virtual OSE.
There’s a new AI related term too: “Excessive use of a Microsoft Generative AI Service may result in temporary throttling of Customer’s access to the Microsoft Generative AI Service“
Microsoft have announced their financial results for Q1 FY24 (July – Sept 2023) so let’s dive in and take a look.
Overall revenue was $56.5 billion, a 13% increase Year on Year (YoY), while net income was up 27% to $22.3 billion. The “Microsoft Cloud” revenue hit $31.8 billion which was a 24% increase.
Productivity & Business Processes
Revenue = $18.6 billion, up 13%
Office 365 Commercial = up 13%
Dynamics 365 = up 29%
Office 365 growth is primarily driven by SMB and Frontline SKUs.
Intelligent Cloud
Revenue = $24.3 billion, up 19%
Azure growth was 29% which is the first time for 2 year that the rate of growth has increased quarter on quarter. Q4 FY23 was 26% and now it’s at 29% which shows that spend in Azure is picking up at a newly increased speed.
Earnings call highlights
Azure Arc up to 21,000 customers – a 140% increase YoY. <– How much of this is driven by the new PAYG ESUs and Microsoft’s push?
16,000+ customers using Microsoft Fabric.
20 million Monthly Active Users (MAU) for Power Apps.
Total headcount is 7% lower than 1 year ago.
Satya Nadella gives a shoutout to the newly announced Oracle@Azure program as a driver of cloud growth:
“Once we announced that the Oracle databases are going to be available on Azure, we saw a bunch of unlock from new customers who have a significant Oracle estate that have not yet moved to the cloud, because they needed to rendezvous with the rest of the app estate in one single cloud”
Interesting to see Oracle contributing to Microsoft’s growth!
Lots of talk of AI throughout, looking ahead to the launch of M365 Copilot on November 1st.
It’s clear that Microsoft are in a strong position and it looks like growth will continue for the foreseeable. Yes there’s a lot of volatility in the world, both economically and politically, but Microsoft have first mover advantage on per-user generative AI for business users with Copilot as well as several other growing products.
The October Microsoft Product Terms introduced a new SKU “Microsoft Defender for IoT – EIoT Device License – add-on“.
This add-on license will enable “real-time device discovery, continuous monitoring, and vulnerability management capabilities for eIoT devices licensed per device“.
Although it appeared this month (October), Microsoft have now stated it won’t actually be available until November 1st due to “a slight delay”.
Availability
The Product Terms list the pre-requisite licenses as:
Microsoft 365 A5/E5
Microsoft 365 A5/E5/F5 Security
Microsoft 365 F5 Security and Compliance
Microsoft Defender for Endpoint P2
Windows 10/11 Enterprise A5/E5
This capability will also be included within Microsoft 365 E5 and E5 Security from November 1st.
Hang on…
If it’s included in M365 E5/Security, why would you purchase the add-on for those licenses? That’s a good question and there is an answer:
Each M365 E5/Security license allows you to cover up to 5 IoT devices so, if you have more IoT devices than M365/Security USLs x 5, you can buy add-on licenses to cover the rest.
Definitions
IoT = Internet of Things
EIoT = Enterprise Internet of Things <–This appears to mean, to Microsoft, devices being used “in the context of business operations“
The Office 365 “no Teams” EEA SKUs have been added
Azure AD rebranded to Microsoft Entra ID
Universal Print per user added
Microsoft Defender for IoT – EIoT Device License – add-on added
Bit of Viva name tweaking, we now have: Microsoft Viva Employee Communications and Communities Microsoft Viva Workplace Analytics and Employee Feedback
The Copilot Copyright Commitment is added
New Copilot/Generative AI relation terms including:
“Customer may not…try to gain unauthorized access to or disrupt any service, device, data, account or network, including by intentionally evading or disrupting restrictions in Metaprompts”
Microsoft Extended Security Updates (ESUs) are a paid for subscription that provides 3 additional years of security updates for Windows Server and SQL Server versions that are no longer in support. First released for 2008/R2 (which are now so old even ESUs aren’t an option), they are now available for 2012/R2.
For the last few years, ESUs have been available to Enterprise customers only but now, as of October 1st 2023, Microsoft have announced their arrival on CSP:
“CSP partners will be able to offer ESUs for end of support versions of Windows Server and SQL Server.
Customers will then have the right to use licenses covered by ESUs on deployments on-premises or within outsourced environments running on Authorized Outsourcers. Customers may also apply ESU licenses to “license-included” workloads acquired from Services Provider Licensing Agreement (SPLA) partners or CSP-Hosters.”
In terms of eligibility, Microsoft say:
“Customers will require Software Assurance (SA) or an equivalent subscription to be eligible to buy the associated ESU. Perpetual licenses only don’t qualify.
However, a customer doesn’t require SA or subscription to utilize ESUs with license-included services purchased from SPLA providers.“
Name changes were the name of the game this month:
Microsoft Viva Sales has its named changed to “Microsoft Sales Copilot” Dynamics 365 Marketing = “Dynamics 365 Customer Insights – Journeys” Dynamics 365 Customer Insights = “Dynamics 365 Customer Insights – Data” Sold together as “Dynamics 365 Customer Insights” 🙄
Microsoft have announced a new offering, Microsoft Copilot.
No, I haven’t been under a rock for the last 12 months…I know there are already a bunch of Copilots but it looks like Microsoft have, in their infinite wisdom, decided to bundle some of the Copilots (but not all of them) together into 1 thing called Copilot 🙄
The entity known as “Microsoft Copilot” will include (if that is the right word?):
Windows 11
Microsoft 365
Edge
Bing
Microsoft say:
“Copilot will begin to roll out in its early form as part of our free update to Windows 11, starting Sept. 26 — and across Bing, Edge, and Microsoft 365 Copilot this fall.”
With regards to the M365 piece, I think it means that “Copilot” will be able to interact with M365 Copilot – rather than include its capabilities…but it’s not really clear.
Microsoft 365 Copilot
Release date
Microsoft have announced that Microsoft 365 Copilot General Availability for Enterprise customers is November 1, 2023. There is a 300 user minimum purchase for Copilot too – meaning a $9,000 per month spend at least. While it’s a surprise to see this minimum, it’s not a huge outlay for most Enterprise Agreement customers really.
It’s been noted that 300 is the maximum for the Business plans so, despite announcing a Copilot add for Business SKUs, this effectively precludes the majority of SMBs. In my opinion, Microsoft will reduce/remove the minimum at the point they make Copilot available on other agreements.
Why is there a minimum? That’s a great question and one that we don’t have a definite answer for. It seems most likely that Copilot needs a certain amount of data (and perhaps connections )to really work its magic – although, saying that, all the Copilot examples I’ve seen wouldn’t seem to require that. They’ve all focused on individual areas – add a column to this table, calculate the average sales for next year, makes all slides the same font etc. and that wouldn’t need aggregated internal training data.
Some people suggest it’s to set a minimum revenue threshold but I’m not sure about that either tbh.
New feature
Microsoft 365 Copilot Chat works across all your data including, but not limited to:
Emails
Meetings
Chats
Documents
Web
and will work as an assistant that understands “you, your job, your priorities and your organization“.
Big thanks to Jack Rowbotham, Microsoft Product Marketing Manager, for sharing this info on LinkedIn 😊
The European Commission (EC) announced on July 27th, 2023 that they have opened a formal investigation into Microsoft. The focus is whether they have breached EU anti-competition rules through the bundling of Teams with Office/Microsoft 365.
Slack filed a complaint back in July 2020 that alleged Microsoft had:
“created a weak, copycat product and tied it to their dominant Office product, force installing it and blocking its removal, a carbon copy of their illegal behavior during the ‘browser wars.”
and now the European Commission have taken it up. I take it that at least part of the 3 year gap has been used by the EC to look into the situation and decide that there is merit to it being investigated formally.
“concerned that Microsoft may grant Teams a distribution advantage by not giving customers the choice on whether or not to include access to that product when they subscribe to their productivity suites and may have limited the interoperability between its productivity suites and competing offerings.
These practices may constitute anti-competitive tying or bundling and prevent suppliers of other communication and collaboration tools from competing, to the detriment of customers in the European Economic Area (‘EEA’)”
This isn’t the first time Microsoft have been here with the EU so I thought a little look back would be in order 😊
Media Player and the N SKU
As well as the “browser wars”, this is also reminiscent of the ruling in 2004 that Microsoft were guilty of breaching these rules by including Media Player with Windows, which led to the creation of the Windows “N” SKU…and a €497 million fine which was, at the time, the largest ever dished out by the EU.
In the 2004 ruling, the initial fine was €165 million which was then doubled to €331 million due to “Microsoft’s significant economic capacity” and finally an additional 50% was added due to the length of time the issue had been happening (5.5 years).
In FY 2003, Microsoft had revenue of $32.1 billion with operating income of $13.2 billion. In FY 2023, Microsoft had revenue of $211.9 billion and operating income of $88.5 billion…that’s a roughly 6.5x increase over the last 20 years. Should the EC decide to fine Microsoft in this latest case, simply multiplying the previous amount x 6.5 would come to a little over $3 billion!
It must be noted that the 2004 ruling was not just about Media Player, it also covered interoperability between Operating Systems.
The European Commission’s decision found that:
“Microsoft infringes Article 82 of the Treaty by tying WMP with the Windows PC operating system (Windows). The Commission bases its finding of a tying abuse on four elements:
(i) Microsoft holds a dominant position in the PC operating system market
(ii) the Windows PC operating system and WMP are two separate products
(iii) Microsoft does not give customers a choice to obtain Windows without WMP
(iv) this tying forecloses competition.”
What is Article 82?
“Article 82 of the Treaty” refers to the “Treaty establishing the European Community (TEC)” which is now Article 102 “Treaty of the Functioning of the European Union” (TFEU). This states:
“Any abuse by one or more undertakings of a dominant position within the internal market or in a substantial part of it shall be prohibited as incompatible with the internal market in so far as it may affect trade between Member States.
Such abuse may, in particular, consist in:
(a) directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions;
(b) limiting production, markets or technical development to the prejudice of consumers;
(c) applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;
(d) making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.”
and is primarily focused on abuses by companies with a dominant position.
My thoughts
It’s true that you don’t get a choice as to whether Teams is included in your Office package when you purchase it. It is possible to prevent Teams from installing with M365 Apps, it isn’t the default option but the guidance is available here from Microsoft.
I can see it being quite likely that an organisation would stop paying for Slack once they purchased Office 365 and got Teams included with that, effectively for free. Now, with all the features and functionality it contains, I imagine that Teams would be successful as a standalone, paid for product but I suppose something the EC will consider is whether it would have reached that point without being bundled for the last few years? Also, what is the impact on consumers if Microsoft make O/M365 more expensive to include a paid-version of Teams?
Finally, I want to state that I Am Not A Lawyer and these are my own thoughts and musings on the subject based on the publicly available information.
Following recent security breaches where important information was only available to those customers paying for Office 365 E5, Microsoft have announced they are moving certain Microsoft Purview Audit features from the Premium tier into the Standard tier. Following urging from the ‘Cybersecurity and Infrastructure Security Agency’ (CISA), updates will start from September 2023.
Purview audit availability
Purview Audit Premium is only available with E5 licenses while Purview Audit Standard is part of:
Microsoft Business Basic/Standard subscriptions
Microsoft 365 Apps for Business subscription
Microsoft 365 Enterprise E3 subscription
Microsoft 365 Business Premium
Microsoft 365 Education A3 subscription
Microsoft 365 Government G1/G3 subscriptions
Microsoft 365 Frontline F1 or F3 subscription, or F5 Security add-on
Office 365 Enterprise E1/E3 subscription
Office 365 Education A1/A3 subscriptions
which covers a significantly wider portion of Microsoft’s customer base.
Customer with these licenses “will receive deeper visibility into security data, including detailed logs of email access and more than 30 other types of log data” and Microsoft are also doubling the default retention length from 90 to 180 days.
Cloudy with a chance of Licensing 