Microsoft’s latest AI product Copilot, which promises to be a real game changer when it comes to applying Generative AI to business, now has pricing available.
It will cost $30 per user per month and, as we saw recently, will be an add-on license to Microsoft 365 E3/E5/Business Std/Business Premium.
That’s higher than I was expecting; I thought they’d go lower to ensure as many people as possible got on-board. I know there stand to be some really great time savings and productivity increases but an additional $360,000 per year for an organisation licensing 1,000 users seems quite steep.
Of course, many organisations won’t pay that price in reality with volume discounts on EA, negotiated discounts etc. but it will still represent a large investment for many.
Bing Enterprise Chat
This has also been announced – a way to give employees a more powerful way of searching without risking data leakage. Microsoft state:
“Chat data is not saved, and Microsoft has no eyes-on access – which means no one can view your data. And, your data is not used to train the models.”
This is included in Microsoft 365 E3/E5/Business Std/Business Premium free of charge and you can access Bing Chat Enterprise using your work account wherever Bing Chat is supported — Bing.com/chat and the Microsoft Edge sidebar. It will eventually be available as a standalone offering for $5 per user per month.
From January 1, 2024* it will no longer be possible to exchange reservations for:
Azure Reserved Virtual Machine Instances
Azure Dedicated Host reservations,
Azure App Services reservations
purchased on or after that date. For reservations purchased before that date, you will have the option to exchange once after the cut-off date. There is no limitation being put on trading in reservations for Azure Savings Plans, that will still be perfectly possible.
Ensure you do a review of your Reserved Instances, and how you use exchanges, prior to the end of 2023. If you find a lot of exchanges take place, it’s worth understanding why and what changes you may need to make to processes going forward.
*Update*
Microsoft have extended the deadline to “at least” July 1, 2024, giving organisations at least a further 6 months to get on top of they Azure reservations needs and strategy.
You can see more about the change and grace period here.
For more answers, advice, and insights into Microsoft licensing for you and your organisation – get in touch here:
A new addition to the July 2023 Product Terms is Microsoft Dev Box. This is an Azure services that provides pre-configured, project-specific virtual workstations for developers.
Licensing
Dev Box must be used “to design, develop, or test applications” and users need to be licensed with:
Windows 10/11 Enterprise
Intune
Azure Active Directory P1/P2 (now Entra ID)
These can be licensed individually or as part of:
Microsoft 365 F3/E3/G3/E5/G5/A3/A5/Business Premium
Microsoft prohibit using “the service to perform server functions to devices outside of the service or to third parties” and also “for sustained distributed computing or digital asset transaction validation workloads“.
The “Azure Customer Solution” clause in the Azure General Terms:
“Customer may create and maintain a Customer Solution. Despite anything to the contrary in Customer’s licensing agreement, Customer may permit third parties to access and use the Microsoft Azure Services solely in connection with the use of that Customer Solution.”
does not apply.
Pricing
Where there will be high ongoing usage, the Max Monthly Price makes sense but for shorter/more variable scenarios, the Hourly Compute price will likely be more effective.
The storage cost is paid each month until the Dev Box is deleted, so make sure to keep an eye on old, unused instances as that can soon start to add up across a large organisation!
Microsoft have added 2 new products to their Entra family:
Microsoft Entra Internet Access
Microsoft Entra Private Access
Both are focused on security and protecting access to apps over the internet.
Microsoft Entra Internet Access
An identity-centric Secure Web Gateway that protects access to internet, SaaS, and Microsoft 365 apps and resources. It extends Conditional Access policies with network conditions to protect against malicious internet traffic and other threats from the open internet.
Microsoft Entra Private Access
An identity-centric Zero Trust Network Access that secures access to private apps and resources. It reduces operational complexity and cost by replacing legacy VPNs and offers more granular security. You can apply Conditional Access to individual applications, and enforce multifactor authentication, device compliance, and other controls to any legacy application without changing those applications
These 2 products, plus Defender for Cloud Apps, form what Microsoft call their Security Service Edge (SSE) solution:
Microsoft Build 2023 saw the announcement of Microsoft Fabric – “an end-to-end, unified analytics platform that brings together all the data and analytics tools that organizations need” by combining various products including Power BI, Azure Synapse Analytics, and Azure Data Factory.
Additionally, “Fabric comes with a SaaS, multi-cloud data lake called OneLake that is built-in and automatically available to every Fabric tenant. All Fabric workloads are automatically wired into OneLake, just like all Microsoft 365 applications are wired into OneDrive. “
To get more info about what Fabric is, check out the MS post here. To learn more about the licensing and pricing, read on 😊
Microsoft Fabric licensing
Microsoft Fabric takes its licensing model, and some of its terminology, from Power BI Premium which means parts of this may be familiar to you.
Each organisation must have 1 x “organisational” license and at least 1 x “individual” license and each subscription is broken down into tenants, capacities, and workspaces.
Organisational licenses
These provide the infrastructure for Microsoft Fabric – effectively this is what gets things provisioned in Azure so you have something to access/work with. There are 2 types which follow the Power BI Premium pattern:
Capacity – This provisions a set of resources in Azure with different SKUS providing different amounts of capacity, cores, RAM etc.
Premium Per User – Gives per-user access to Power BI elements on Microsoft Fabric, with shared capacity only.
Capacity SKUs
SKU
Capacity Units
PAYG (Hourly)
PAYG (Monthly)
Power BI SKUs
Power BI v-cores
F2*
2
$0.36
$262.80
N/A
0.25
F4*
4
$0.72
$525.60
N/A
0.5
F8*
8
$1.44
$1,051.20
EM1/A1
1
F16*
16
$2.88
$2,102.40
EM2/A2
2
F32*
32
$5.76
$4,204.80
EM3/A3
4
F64
64
$11.52
$8,409.60
P1/A4
8
F128
128
$23.04
$16,819.20
P2/A5
16
F256
256
$46.08
$33,638.40
P3/A6
32
F512
512
$92.16
$67,276.80
P4/A7
64
F1024
1024
$184.32
$134,553.60
P5/A8
128
F2048
2048
$368.64
$269,107.20
N/A
256
Pricing of Fabric capacity SKUs at US west 2
*SKUs smaller than F64 require all users, including those consuming content, to be licensed with a Power BI Pro license.
The Azure “F” SKUs are billed PAYG per second
The P SKUs are billed monthly/annually with a monthly commitment and support Fabric being enabled on top of the Power BI subscription.
The EM SKUs do not support Fabric.
Individual licenses
Free – This allows users with access to Fabric capacity to create and share Fabric content
Pro – Required to create, share, and in some cases consume, Power BI content
This appears to show a differentiation between “Fabric content” and “Power BI content” – even if the Power BI content is being created within Fabric 🤔
Pricing and costs
As well as the SKU pricing above, there will also be additional costs for OneLake storage. Again based on costs in US West, the price is:
$0.023 per GB per month
That equals $23 per TB per month ($276 annually). 500TB of data in Fabric OneLake will be $138,000 per year and I feel like that’s probably a low amount of data for many organisations.
There are also potential bandwidth costs as data is accessed and moved between regions:
Managing these resources and costs can be done through a combination of the Fabric portal and Azure Cost Management:
Furthermore, Azure Reservations (Reserved Instances) are planned for later in 2023 which will make the Fabric capacity pricing comparable to the Power BI capacity pricing.
While we’re still awaiting the full release, which could be July 1st or perhaps during Microsoft Inspire later that month, we do have more information available.
Eligible base licenses are:
Microsoft 365 E3 Microsoft 365 E5 Microsoft 365 Business Standard Microsoft 365 Business Premium
And users need to have an Azure AD account too. This is a clear indication that Copilot will be an extra add-on license.
Furthermore, their M365 Apps must be on “Current Channel” or the “Monthly Enterprise Channel” to access Co-pilot.
I haven’t seen any indication of pricing yet but I’m thinking perhaps £10 for E3 and £5 for E5? With some promos at first of course.
*Update* It turns out I was way off base! Microsoft have confirmed the price is $30 per user per month. More info and examples here.
The Multi-Geo add-on SKU is finally arriving on CSP from June 1, 2023 for users licensed with:
Microsoft 365 (but seemingly not the Business SKUs)
Office 365
Exchange Online
SharePoint Online
OneDrive for Business
This add-on enables customers to manage data-at-rest locations across multiple regions within a single tenant.
Licensing
As a minimum, customers must purchase a quantity of Multi-Geo licenses that is equal to at least 5% of the total number of eligible M365 licenses*. So if you have 1000 eligible licenses, you must purchase at least 50 Multi-Geo licenses.
A tenant must be configured for Multi-Geo support, a process which begins automatically once ordered licenses appear in the tenant. Interestingly Microsoft state that:
“the time required to configure a Tenant for Multi-Geo support varies from Tenant to Tenant, but most Tenants finish within a month after receipt of the feature licenses. Larger or more complex Tenants may require more time to complete the configuration process“
so make sure you leave enough time before the functionality is needed in production. You can see more details here.
Microsoft announced their Q3 FY23 (Jan – Mar 23) results recently – let’s take a look at the numbers.
Overall revenue for the quarter was $52.9 billion – an increase of 7% while net income was up 9% to $18.3 billion. The latter something of a turnaround from the 12% decrease the previous quarter.
Productivity & Business Processes
Revenue = $17.5 billion…up 11%
Office 365 Commercial up 14%
LinkedIn up 8%
Dynamics up 25%
A little higher than Q2 but still lower than we’ve been seeing for the last couple of years.
Intelligent Cloud
Revenue = $22.1 billion…up 16%
Azure growth was 27% again, a decent increase but continuing the ongoing shrinking of the percentage increase each quarter.
Earnings Call
Satya Nadella stated that Microsoft continue to focus on 3 priorities:
Helping customers to get the most value out of their digital spend
Investing in AI to increase their Total Addressable Market (TAM) and be the leader
Aligning their cost structure with their revenue growth
We are now in the era of ChatGPT and AI – an area where Microsoft are expected to do very well in the coming months and years – and Nadella stated in the earnings call that they have over 2,500 Open AI Azure customers which is a 10x quarter on quarter increase. He also mentioned that ChatGPT runs on top of Microsoft’s CosmosDB.
Further updates include:
Azure Arc is up to 15,000+ customers which is 150% up year on year (YoY).
Power Platform is up to 33 million Monthly Active Users (MAU) – almost 50% up YoY.
Teams has broken the 300 million MAU mark.
Almost 60% of Enterprise customers are buying Teams Phone, Teams Rooms, and/or Teams Premium.
Almost 600,000 customers have deployed at least 4 Microsoft security workloads – a 35% YoY increase.
Amy Hood stated that, at the end of April 23, total headcount was 9% more than a year prior.
Satya mentioned Copilot several times and, in response to an analyst question, stated that:
“We do plan to monetize a separate set of meters across all of the tech stack, whether they’re consumption meters or per-user subscriptions. The copilot that’s priced, and it is there, is GitHub Copilot. That’s a good example of incrementally how we monetize the price lists out there, and others are to be priced, because we are in preview mode. But you can expect us to do what we’ve done with GitHub Copilot pretty much across the board”
Satya Nadella, Q3 FY23 earnings call
and that gives a good idea of what Copilot licensing may look like. I think my expectation of add-ons to E3 and E5 is pretty accurate.
While Microsoft’s revenue and profits are looking great, and they’re excited about all the growth ahead of them, the shine is dimmed somewhat by 2 things: the memory of the layoffs of circa 10,000 staff in January and the recent news that there are to be no pay raises across Microsoft. Give the increases in cost of living, energy, and inflation – wages staying flat can be seen as a pay cut in many ways.
Cloudy with a chance of Licensing 