With Microsoft server software, desktop licensing costs can add up

The cost of licensing Microsoft server software may seem negligible when looking at individual desktops, but not if you look across the organization. Understand how vendors promote software subscriptions, and consider third-party alternatives to reduce desktop licensing costs.

Many advertisements claim that products cost "only" a small amount of money per day or month. That seemingly small sum, added up over a year, actually equals a fair amount of change. Now multiply that by however many employees are in your organization. Suddenly, we're into hundreds of thousands or even millions of dollars per year.

That's why vendors such as Microsoft license every desktop in an enterprise for a small monthly subscription, even for software that runs on servers in the data center. Microsoft loves to license server software on the desktop, for two reasons:

  • No one owns the business desktop as completely as Microsoft does.
  • Fees like $1 per desktop, per month look trivial -- particularly if customers don't take the time to figure out the annual cost for 10,000 desktops.

Now, desktop licensing costs aren't a new concept in computing. For decades, organizations licensed software that ran on mainframes and minicomputers by "seats" -- either named users or physical devices. They didn't have a choice because mainframe and minicomputer software didn't run on a local desktop. Today, however, they do have options, which can have substantial operational and financial effects.

Let's take antivirus, antispam and antiphishing software for Microsoft Exchange as an example. Before Exchange 2003, customers would generally purchase third-party anti-malware solutions for Microsoft server software or count on desktop software, such as third-party Outlook add-ons, to handle it.

With Exchange 2003, Microsoft added Intelligent Message Filtering (IMF), building in techniques for filtering messages based on the sender's IP address or name, the recipient's name, the message content and attachments. Microsoft doesn't promote IMF, probably because it's free. (Why promote something free when you can promote something that costs much more overall, but is licensed by a small fee on each desktop?)

The two main anti-malware products that Microsoft promotes are Forefront Protection for Exchange Server (FPE), which supplements IMF with stronger virus scanning, and Forefront Online Protection for Exchange (FOPE), a hosted service that offers fairly complete anti-malware protection.

Microsoft recommends supplementing FPE ($15 per year, per desktop) with FOPE ($21 per year, per desktop). FOPE appears to duplicate many functions performed by FPE and IMF, and it has the added virtue of being a hosted service. Anti-malware services are among the most popular hosted services because they intercept the 90% of Internet mail traffic that is spam before it hits the customer's network, significantly reducing network traffic and server loads.

The economics of per-desktop licensing costs bear closer examination, however. A 10,000-seat organization that purchases both FPE and FOPE will spend about $300,000 a year protecting its email after volume discounts are taken into account. Assuming that an enterprise has 20 Exchange servers, that comes to about $15,000 a year per server.

Compare that with third-party solutions that are licensed directly per device or per server, rather than per desktop.

A hardware appliance such as the Barracuda antispam and antivirus firewall costs about $25,000, plus $8,000 a year for signature updates and technical support. This is for a unit capable of scanning and intercepting email for more than 10,000 users, but higher capacities are available. Even using several of these devices to provide redundancy will not come close to the cost of a single year of FPE and FOPE.

Many vendors that offer anti-malware protection for Microsoft server software also sell per-server licenses, although per-user or per-device licensing is also popular among Microsoft competitors.

Microsoft makes a persuasive argument that per-user licensing isolates desktop licensing costs from the server architecture. In other words, once every desktop has a subscription, the organization can deploy as many Exchange servers as it likes without paying more for security services.

In addition, hosted services such as FOPE can reduce network costs and even the number of Exchange servers that an organization needs.

Organizations should not assume, however, that Microsoft server software subscriptions costing less than $2 a month per desktop are minor expenses. Enterprises with thousands of desktops need to do the math, comparing the technical benefits and potential desktop licensing costs and alternatives. The savings may not be at all trivial.

Read more from Paul DeGroot

Paul DeGroot
is a writer, trainer and principal consultant at Pica Communications, which specializes in Microsoft licensing strategies and policies.

This was first published in January 2012

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