Microsoft first announced these changes in May 2022 and, after an update in September, we’ve now got the majority of the info in the October 2022 Product Terms document. Let’s take a look at what’s changed and what it means for us all.

First things first, the Listed Providers:

• Microsoft Azure
• Amazon AWS
• Google Cloud Platform
• Alibaba Cloud

are not included in any of these changes.

Outsourcing Software Management clause

This is in the “Universal license terms for all Software” which means it applies to all products under this category. There are 3 new elements within this clause:

Flexible Virtualisation Benefit

The Microsoft wording:

“Customers with subscription licenses or Licenses with active Software Assurance (including CALs) may use licensed copies of the software on devices, including shared Servers, that are under the day-to-day management and control of Authorized Outsourcers.”

This is similar to the existing “License Mobility through Software Assurance” benefit but doesn’t have the requirement to use an “Authorized Mobility Partner” -rather, you can use any “Authorized Outsourcer” partner…which is any partner that isn’t a Listed Provider.

While much of the focus here is on Windows Server, this new benefit applies to other products such as SQL Server too.

CSP Hoster

The Microsoft wording:

“Customers with subscription licenses or Licenses with active Software Assurance (including CALs) may access their licensed copies of software that is provided by a Cloud Solution Provider-Hoster and installed on that partner’s devices.”

Dedicated device outsourcing

The Microsoft wording:

“Customers may use licensed copies of the software on devices that are under the day-to-day management and control of Authorized Outsourcers, provided all such devices are and remain fully dedicated to Customer’s use.”

As I say, these apply to all Microsoft Software products and, as we’ll see, individual products may have their own additional terms.

Windows Server – license individual VMs

You are now able to license individual Windows Server virtual machines rather than licensing the underlying physical hardware. As expected, there are a few rules you need to follow:

• Minimum of 8 core licenses per VM
• Minimum of 16 core licenses per customer
• Licenses must have active SA or be active subscriptions – this includes CALs used to access the Windows Server instances
• Licenses can be re-assigned with the same server farm as often as needed.
• 90-day rule applies if moving to another server farm/cloud provider

Windows 11

Customers with per-user licenses for Windows 11:

• Enterprise
• Education
• VDA

install Windows 10 Creators Update or later in an Azure VM or a server that meets the requirements in the “Outsourcing Software Management” clause. The QMTH language has been removed from this section too, opening this up to the wider pool of Authorized Outsourcers.

Reading the terms, it appears that the restriction on local virtualisation with CSP licenses has been removed too – bringing them even closer to parity with volume licenses. The language now states that customers can install Windows in a VM running on their Azure or “a server” – which I read as including their own servers as well as those of an authorized outsourcer.

Desktop Applications

For Office/Project/Visio, the word “dedicated” has been removed from the terms which means hosting on shared servers is now possible:

“Remote use of the software running on a Server is permitted for any user from a Licensed Device”

Microsoft 365

There have been changes to the use rights for the Windows component of Microsoft 365 too. The previous language was:

“rights to access and use remote virtualized instances of Windows only apply to Licensed Users that are the Primary User of a device licensed with a Qualifying Operating System.”

While it now says:

“Licensed Users may only run Windows Enterprise locally on devices with a Qualifying Operating System.”

Removing the primary user requirement to access remote virtual instances. Microsoft say:

“Essentially, when licensed as part of Microsoft 365, the requirement to use VDA rights for remote access from desktops without Qualifying Operating Systems no longer applies“

There is also a change for Microsoft 365 F3 to loosen the remote virtualisation restriction. The previous clause:

“rights to access and use virtualized instances of Windows only apply to Licensed Users of a shared device with a Qualifying Operating System“

has been removed.

Microsoft 365 Apps

There is definitely some further clarification needed here. Microsoft released a new licensing guide “Using software products under the Flexible Virtualization Benefit” this month and that document states that the Flexible Virtualisation Benefit applies to Microsoft 365 Apps (formerly Office 365 Pro Plus).

“With the introduction of the Flexible Virtualization Benefit, customers’ options for using Microsoft 365 Apps…outside their own data centers are expanded to include any Authorized Outsourcer’s shared servers“

However, I can’t find language which clearly states this in the current Product Terms, so for now I’d advise not to get too carried away! I expect we’ll see an update to the Product Terms soon to add that language in – but I’ll update either way once we see something from Microsoft.

Thoughts

This is all pretty exciting for a licensing fan like myself – lots of new language and terms and things to check and understand. Also lots of training presentations to update!

For customers though, I’m not sure how much impact this will really have. Yes, it enables organisations to work with a much larger pool of potential hosting providers…but, in my experience at least, most orgs that are struggling want to work with Amazon AWS…and they’re not included in these changes as they’re a Listed Provider. I’m keen to see what real world impact these changes have and who wins (and loses) from it all.

PS: I’m still processing all this new info so will update with corrections as/if needed!

Further Reading

New Flexible Virtualisation Benefit licensing guide

Windows Server 2022 licensing guide

Product Terms