Microsoft azure dedicated host

Why Microsoft’s Latest Licensing Cost Increases Matter More Than You Think

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Regardless of the type of business you’re running or even the industry you’re operating in, it’s safe to say that technology is an important facilitator of the hard work you’re doing on a daily basis. Not only does the right application of technology enable better communication and empower collaboration in a best-case scenario, but it’s also a large part of what helps create your competitive advantage – even in the most crowded of marketplaces.

But the return on investment of that technology is equally important – especially if you’re already operating in a space known for its razor-thin profit margins. That simple idea is a large part of why tech giant Microsoft has found itself in the news recently, although not necessarily for the reasons it may have liked.

Microsoft recently introduced a technology preview of its new Azure Dedicated Host – a service designed to allow business professionals to run all of an organization’s virtual machines (both those running on Windows and those on Linux) by way of single-tenant physical servers for the first time. The good news is that Azure Dedicated Hosts are aimed at providing companies with the visibility and control they need to address not only issues like corporate compliance but regulatory requirements as well.

The bad news is that, at the same time, Microsoft also made some significant licensing changes that will make the brand’s software more expensive to customers using rival public cloud services like Amazon Web Services, Google and Alibaba.

Microsoft’s Price Increases: Breaking Things Down

To get an idea of why this is so important, one must first examine the pricing structure that Azure Dedicated Hosts bring with them.

Right now, there are two specifications of dedicated hosts available. These include:

Type 1

which is based on a 2.3 GHz Intel Xeon E5-2673 version 4 architecture. It has 64 vCPUs and costs $4.055 to $4.492 per hour, depending on whether users select 256 GB or 448 GB RAM configurations.

Type 2

which is based on a Xeon Platinum 8168 architecture. It has 72 vCPUs and 144 GB of RAM, coming in at a cost of $4.039 per hour.

It’s important to note that those prices do NOT include licensing costs – something that was done deliberately.

Today, customers can use on-premise licenses on dedicated servers that are rented from any hosting or cloud provider they’d like, third party or otherwise.

Beginning on October 1, 2019, however, on-premise licenses that are purchased without A) Software Assurance, and B) mobility rights will no longer be able to be deployed with dedicated hosted cloud services that are offered by Amazon, Google or Alibaba. Note that the Amazon stipulation also includes instances of VMware Cloud running on Amazon Web Services.

To put it another way, a lot of the software deployments that are currently allowed will no longer be permitted on dedicated cloud services from Microsoft’s largest competitors once October rolls around. In a larger sense, Microsoft is actually going out of its way to make it harder (and in some situations, to make it impossible) for businesses to bring their own licenses into the scenario.

At that point, you’ll essentially have two options available to you: you can either rent the software you need via a Service Provider License Agreement, or you’ll have to purchase licenses WITH Software Assurance. Both of these things come with annual service charges.

In addition, while Microsoft does officially list Azure as one of those “listed providers” alongside Amazon and Google above, in some cases customers have a clear cut “get out of jail free cause.” Microsoft has dubbed this the “Azure Hybrid Benefit.” For example, under the new changes, unlimited virtualization for SQL Server via Enterprise on a per-core licensing basis will no longer be available… unless you’re taking advantage of the Azure Hybrid Benefit. If you are, from your perspective, not much is going to change.

Officially, Microsoft has described the Azure Hybrid Benefit as a way to “get more value from your Windows Server licenses and save up to 40% on virtual machines” at the same time. And, in its promotional material, Microsoft also states that AWS is “five times more expensive than Azure or Windows Server and SQL Server.” Changes like this are a large part of the reason why.

The changes outlined above apply to dedicated hosts from the listed providers – multi-tenant hosts are not affected (at least, not yet). Though in the case of multi-tenant hosts, the ability to bring your own license was already significantly limited – so the “benefit” isn’t nearly as large as it might appear.

Overall, it’s clear that Microsoft is trying to increase Azure’s market share by increasing costs when using other cloud providers. The tech giant is also taking some fairly significant risks with existing customers in the process. Whether or not these changes will have the impact that Microsoft is hoping for – or if it will just inspire people to begin looking for non-Microsoft solutions – remains to be seen.

It is, however, a topic that people in all industries will be paying careful attention to moving forward.

The Outer Edge Technology Approach

For over ten years, the hardworking and passionate team at Outer Edge has dedicated itself to helping businesses of all sizes design, build and manage the types of technology solutions they need to take their organizations to bold new heights. Microsoft’s recent increase in the cost of licensing its software to rival public clouds doesn’t change this one bit.

You still need software that will help drive your business forward, and we still help you achieve that in the most efficient and cost-effective ways possible. Regardless of what step we need to take to guarantee that your technology will properly align with your long-term needs in a way that gives you a competitive edge, rest assured that it’s a step we will enthusiastically take.

If you’d like to find out more information about Microsoft’s recent licensing cost increase, or if you have any additional questions that you’d like to discuss in a bit more detail, please don’t delay – contact Outer Edge Technology today by calling 1-844-OET-EDGE or emailing

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