Microsoft will raise the price for its user client access license on Dec. 1 by as much as 15%, resulting in significantly higher prices for customers who have little choice but to pay up.
The user client access license (CAL) is intended for organizations whose employees access Microsoft servers or products from a range of devices, whether it's a laptop, smartphone or tablet. The price increase won't affect the device CAL, which is intended for single devices accessing a server, regardless of the number of users who use that device.
It's either really shrewd or shortsighted.
director of technology infrastructure, Broward Center for the Performing Arts
Windows user CAL customers are frustrated by the sudden price hike.
"I think it's a raw deal. We're already spending thousands of dollars for server licenses. They're sticking it to everybody," said Scott Frazier, IT administrator at Con. J. Franke Electric, an electrical contractor based in Stockton, Calif. "I think it's just nuts that we pay for the server and then they charge us to use it."
A spokesperson for Microsoft said the company increased the user CAL price because it now "supports unlimited devices and simplifies licensing management and compliance as devices in the workplace proliferate. Pricing for user CALs will change to reflect the increased value."
Frazier said he hasn't figured out how much the increase will impact his company yet, but it may cost an extra $2,500 the next time he renews his Software Assurance agreement with Microsoft. The increases will primarily impact SQL Server and Exchange users.
Customers with existing volume license agreements or software assurance agreements will be able to keep their current pricing until the end of their contract, and will only be affected once they renew their licenses. However, any customers whose contracts expire in the near-term should contact their Microsoft partners to best protect themselves from these price increases, industry watchers said.
Microsoft's way or the highway
Meanwhile, companies are left without much of a choice except to pay the increased price.
"Whenever I get to pay Microsoft more money, I'm not exactly happy about it, but it's not like we're going to switch to somebody else's server products," said Philip L. Moya Jr., IT manager at the San Antonio Kidney Disease Center. "We're in a tight spot [because] 15% is a steep number, but like I said, we're stuck."
Products affected by Microsoft user CAL price increase
- Exchange Server Enterprise CALs
- Lync Enterprise CALs
- SharePoint Server Enterprise CALs
- System Center Configuration Manager
- Windows Server CAL
The problem is there aren't viable alternatives for organizations that have invested significant amounts of money in a Microsoft infrastructure, one analyst said.
"You can't just flip everything into Office 365 or Google Apps. Migrating away from those investments is a years-long project," said Darren Schoen, director of technology infrastructure at the Broward Center for the Performing Arts in Fort Lauderdale, Fla.
Companies have so much process, policy and workflow already established with Microsoft, Schoen said. Plus, there's the additional dollars for training because your employees have been using Office for 10 years, and since everything will be cloud-based, your IT department has to make sure the connectivity and bandwidth are optimized, he added.
"It's either really shrewd or shortsighted," Schoen said. "Microsoft needs to make their money, but the price hikes could cause IT departments to look at other alternatives."
Office 365 a viable option
One of those alternatives might even be a Microsoft product. This price increase continues Microsoft's push to get customers to migrate into the Office 365 environment, said Wes Miller, research vice president at Directions on Microsoft, an independent analyst firm based in Kirkland, Wash., which published a report on the CAL changes.
Miller cited the new pricing for Office 365 Small Business Premium, which was announced in September, as well as the possibility that Office apps on iOS and Android mobile devices will require an Office 365 subscription for editing features as two other recent examples in Redmond's strategy.
"Office 365 doesn't require a CAL," Miller said. "That's going to make it more appealing. I think Microsoft feels like Office 365 is the future for the Services and Tools Division. It's the best approach because you get recurring revenue every month."
Microsoft is in a tricky spot, Miller said, because it needs to subtly convince companies to migrate towards Office 365 without alienating them to the point where they will consider alternate vendors.
"Once that ship sails for an IT department migrating away from anything Microsoft because of price hikes, there's no going back," Schoen said. "It's bleeding out the existing install base instead of trying to expand it."