Microsoft Windows Server 2016 Moves to Per-Core Licensing

By Jeff Muscarella

Partner, IT and Telecommunications, NPI

December 21, 2015

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Artwork Courtesy of Prokhorov

Microsoft recently announced that it will switch from a per-processor to a per-core licensing model for Windows Server 2016 Standard and Datacenter editions. While these offerings aren’t due to be released until the second half of 2016, Windows Server customers should pay close attention.

Microsoft may not be billing this as a price increase, but the reality is that many customers migrating to Windows Server 2016 will see costs spike.

Moore’s law – that computing power will double every two years – is still hard at work. Combine that with the explosion of data collection in many industries (which will continue to grow exponentially as the Internet of Things matures), and there is no doubt that customers will deploy more core-dense processors as their data center capacity needs grow. Now Microsoft has a better revenue model to monetize that evolution. Lots of customers saw their SQL costs go up when Microsoft went to a per-core model. Even today the price that Microsoft charged for a single processor license of SQL is equal to the cost of 4 SQL cores, yet few enterprise customers will run SQL on a 4-core processor.

Higher costs aren’t the only concern. When Microsoft makes significant licensing changes (such as this one), the increased complexity creates more opportunity for customers to license incorrectly, and confused customers/incorrect licensing opens the door for Microsoft to conduct more audits (whether formal or soft). Typically, there are revenue expectations with these sort of changes and Microsoft’s sales teams are tasked with meeting them through selling or auditing. It wasn’t just costs that increased during the SQL licensing change – audits increased too.

How this licensing change impacts your Microsoft spend depends on many factors. Those customers with heavily virtualized environments can expect to see the biggest cost increases. Our advice? Determine your Windows Server upgrade path now and which levers you can use to mitigate or minimize the cost impact. NPI can help you perform the impact analysis, and recommend license and cost optimization strategies.