New Licensing Fees for Microsoft Exchange Now in Effect

Exchange shops that are embracing the bring-your-own-device movement (BYOD) may pay extra for the practice under a new licensing scheme implemented by Microsoft on December 1, 2012.

The changes affect Client Access Licenses (CALs) for a number of Microsoft products, including Exchange server. Under the new regime, user licensing will be increased by 15 percent. Device licensing will remain the same.

If you already have a multiyear volume license contract with Microsoft that includes user CAL provisions, your pricing for the license will remain unchanged until the agreement expires.

As users of Microsoft’s server software know, the company charges license fees for accessing services on servers running its software. The license allows a user or a device to access services like file sharing and printing.

Microsoft CALs have two options. One allows a user to connect to a server running Redmond’s software with as many devices as they wish — a good license for employees who use an array of devices to do their jobs — workstations, laptop computers, smartphones and tablets.

The other option licenses a device and allows an unlimited number of users to use that device to access the services on a server running Microsoft software. That option appeals to concerns that have more people than machines, such as shops where workstations may be shared by several employees working on flexible schedules or shifts.

Up to now, the CAL fees for both options were about the same. That may have made sense when most users were limited to a desktop and laptop computer. With the expansion of the number of devices in a worker’s arsenal fee parity may be less reasonable.

According to Microsoft, the new user CAL scheme “offers more value in support across unlimited devices and simplifies licensing management and compliance as devices in the workplace proliferate.”

Nevertheless, Microsoft won’t be winning many friends with its new fee increase, especially since it seems designed to squeeze some extra bucks for Redmond’s coffers out of a popular business trend — a trend dominated by devices produced by Microsoft’s competitors Apple and Google.

“Ostensibly, the CAL raise is to make up for the mobile device boom, basically tax that which you can’t control,” Charles Demerjian wrote for SemiAccurate. “It doesn’t take a genius to realize that Microsoft would rather own those devices too, but that market is closed to them now.”

Earlier this year, Microsoft showed that it’s willing to play hardball to maintain its leading role in the enterprise. In April, it told holders of volume licensing agreements for its new Windows 8 operating system that they have to purchase a Companion Device License (CDL) if they intend to use desktop virtualization apps on non-Windows tablets, a move clearly designed to slow the growth of iPads and Android slates in the enterprise.

However, CDLs aren’t necessary if the tablets deployed by the organization are made by Microsoft.

The new tollgate that Microsoft is erecting for organizations that wish to become bring-your-own-device shops could hurt it in the long run. Small businesses are particularly sensitive to price increases and a 15 percent bump could encourage them to look for non-Microsoft alternatives.

In addition, Microsoft’s BYOD tax could hurt its expansion into emerging markets. According to technology and communications research firm Ovum, employees in high-growth markets are more willing to embrace BYOD than those in more mature markets.

In a study it conducted into employee BYOD behavior and attitudes, Ovum found that 75 percent of respondents in emerging, high-growth markets — such as Brazil, Russia, India, United Arab Emirates and Malaysia — demonstrated a much higher propensity to use their own devices at work, compared to only 44 percent in mature markets.

If emerging markets are hotbeds for BYOD, then Microsoft could be reducing the attractiveness of their products in those markets by charging a premium for using them in a BYOD environment.

Written by John P Mello Jr

John Mello is a freelance writer who has written about business and technical subjects for more than 25 years. He is frequent contributor to the ECT News Network and his work has appeared in a number of periodicals, including Byte magazine, PC World, Computerworld, CIO magazine and the Boston Globe

5 Comments

  1. shawn · December 10, 2012

    I honestly can’t see what the problem is here. The aim of any business is to monetize as best as possible its products and offerings. Increases in price are an expected part of normal reactions to market behavior. With the adoption of BYOD was MS simply supposed to expect business’s to allow users to consume services without monetizing that at all? Whilst allowing their peers to gain traction? Ultimately the device/user has to be licensed in some form so i don’t understand what the fuss is about as its just another end point. What that end point actually is be it a tablet/phone/pc etc is academic. I genuinely cannot see how its possible yet to say with such conviction that this will hurt MS business when BYOD is still not mainstream yet in the Enterprise with a slew of obstacles that in some instances prevent its adoption. And is more rather a new IT buzzword (much like Cloud) than a intergral part of mainstream business strategy or infrastructure. The price increase is simply a reaction to current market conditions and offers MS additional revenue for one of its flagship products. If umbrage should be taken with MS, it should be about the recent price increase for Lync Std edition which frankly is absolutely ridiculous. But yet again if the product wasn’t so popular and gaining acception in the market place bet your life there would have been no price increase. Which was no different to the reduction in prices of the Office 365 price plans as adoption was less than MS anticipated.

  2. David Wilhoit · December 10, 2012

    And exactly what “non-Microsoft solution” do you think these emerging young markets will choose? I’m interested to hear what mail system is offering Exchange 2010 functionality and built in mobility.

  3. John P Mello Jr · December 10, 2012

    Shawn, Microsoft may be justified in modifying its pricing structure. The problem is its not going out of its way to explain why it’s doing so. That leaves the door open for critics to do the explaining and, as we’ve seen, those explanations have been less than flattering to Redmond.

  4. shawn · December 11, 2012

    To be honest John it doesn’t need to. Google has recently canned its once ‘free’ Google Apps service. Iv not seen an explanation from them yet and honestly don’t expect to. But again the answer should be obvious.
    MS fundamentally has always been a business that makes a large amount of revenue from licensing. Over the years its prices have always changed and gone up according to the market. So why the surprise now? I’m just not seeing anything new here.

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