Dear Friends,

The past few months seem to have focused largely upon Microsoft®’s increased emphasis on cloud computing and also their desire to maximize the revenue from existing business customers. With respect to the cloud, we saw new features added to Azure® and a sizeable jump in the number of consumer subscriptions to Office 365. Regarding revenue maximization, we are seeing continued emphasis on licensing audits, resulting in the need for increased diligence on software asset management. We have also seen Microsoft become even more aggressive in their efforts to convince users to upgrade to Windows® 10.

 

On the financial side, Microsoft surpassed analysts’ expectations once again and reported an impressive 5% year over year growth from their Intelligent Cloud business unit. Included in that 5% growth was a 140% increase in Azure revenue (constant currency).

 

We expect continued favorable results for the foreseeable future. Even organizations who have traditionally resisted cloud computing are being forced to concede to the benefits. Microsoft will continue to pressure users to adopt Windows 10 and they will continue to exercise their legal right to audit existing customers. Another element that will likely have a meaningful impact at some point is the Internet of Things (IoT). It’s unclear at this point how the IoT will deliver meaningful financial benefit to cloud hosts such as Microsoft, but we know it will generate huge sums of data which will need to be stored and analyzed by someone. Microsoft is well positioned to leverage opportunities in this area.

 

News

Analysis of Microsoft’s® 2nd Quarter FY 2016 Earnings Report from a Licensing Perspective

01.31.2016

By: Daryl Ullman

This is the second quarter since Microsoft changed the manner in which they report earnings. The software giant is now reporting in three operating segments: Productivity and Business Processes, Intelligent Cloud, and More Personal Computing.

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Changes to Windows Server® 2016 Licensing

Microsoft® recently announced that Windows Server® 2016 will be licensed on a per-core metric when it is released next year. Whereas Windows Server 2012 is licensed on a per-socket model, the next version of the server OS will be licensed in a manner consistent with SQL Server® 2014, BizTalk® 2013, and Azure™.

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Microsoft® Product Terms Explained

The Microsoft® Product Terms document can be among the most confusing, and also the most important documents in the Volume Licensing (VL) program. It replaces the Product Use Rights and Product List which were retired in July, 2015 when the Product Terms document was introduced.

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Microsoft® Changes EA Qualification Rules

It’s no secret that Microsoft® frequently changes elements of their Enterprise Agreement (EA), but rarely do they announce a change that impacts which companies are eligible to purchase licenses under the program. Last week the software giant announced that beginning in July, they are raising the entry threshold from organizations requiring 250 devices or users to those with 500 devices or users.

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Office 365™ E5 is Now Available

Whenever Microsoft® announces an update or significant change to one of the Office suites it is typically met with widespread anticipation.

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Microsoft® Demonstration and Training Use Rights

Microsoft’s® policies on product demonstration and training use rights for MS partners can be somewhat confusing but as is always the case with software usage, it’s important to understand exactly how your organization may use their software.

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Preparing for a Software Audit

I have often spoken and written about preparing for software audits. A fact that I typically recite is that receiving notice of an audit doesn’t necessarily mean your organization is suspected of being out of compliance. Large software developers such as Microsoft®, Oracle® and others typically demand some form of audit at least once every three years. 

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