Windows Server Licensing Changes – Cost Neutral or Just Costly?

By Dan Brewster

Director of Client Services – Microsoft, NPI

June 06, 2017

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You’ve probably heard that Microsoft changed the licensing model for Windows Server with the release of Windows Server 2016 several months ago. Previously licensed on a per processor basis, the new licensing model follows the changes made with SQL Server 2012. All physical cores on a Windows Server must now be licensed on a per core model, with a minimum of 8 cores per processor and 16 cores per server.

Like the transition with SQL Server, Microsoft claims this is a cost neutral transition. While true that the cost of a 2-processor license is equal to eight 2-core licenses, what Microsoft is betting on is that Moore’s Law will take effect over time. And there’s nothing cost neutral about that trajectory.

Moore’s Law refers to an observation made by Intel co-founder Gordon Moore, where he predicted that the number of transistors in a dense integrated circuit would double every two years. The modern effect is that the number of cores in a processor will undoubtedly increase in new processors over time. A server that you buy today may have 2 processors and 8 cores, yet a server that you buy in the next few years will likely be standard with 16, 20 or 24 cores.

In other words, a move from processor licensing to core licensing is absolutely a price increase over time. While there’s not much that can be done about this “undercover” cost hike, you can make smart decisions about leveraging your ability to true up processor licenses on your current Enterprise Agreement (if you signed it before October of 2016) and time new hardware purchases before your EA expires.

Here’s an example: let’s say you’re a Level D EA customer in the third year of your agreement. You’re considering purchasing 3 new Windows Servers to run Windows Server Datacenter with the total core count of those servers at 320, 384 and 512. You could either (1) purchase the core packs on a new licensing and SA agreement, or (2) you could true-up the servers on your expiring agreement and only pay SA on the cores in the new agreement. In this scenario with current pricing, option 2 is approximately 25 percent cheaper than option 1.

As always, know your licensing options and the true cost implications of any licensing changes – especially if you’re considering purchasing new Windows Servers in 2017. There are lots of choices and nuances – it’s also a good idea to review your overall Microsoft licensing strategy (at least) annually and make sure it’s optimized for usage, cost and compliance today, and over a rolling three-year horizon.