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Microsoft licensing changes with standalone Windows Enterprise upgrade

Microsoft launched a standalone Windows Enterprise upgrade SKU, but is it a true value or simply a way to lure IT pros to Windows 8?

IT professionals can now upgrade to the Windows Enterprise operating system without having Software Assurance, but that may not be a wise move.

The new Windows Enterprise upgrade SKU adds another layer to the Microsoft licensing program, which is already convoluted. Some IT pros view it as a scheme to attract more businesses to Windows 8.

"This is an 'Oh boy, I bet we could sell a bunch of Windows 8 with a program like this!' thought from Microsoft, which makes it appear as though a corporation could have a brain tumor," said Mike Drips, a longtime IT consultant based in Houston.

Other observers agreed that this change benefits Microsoft -- not customers.

"I'm disappointed with the change," said Paul DeGroot, principal consultant and licensing expert at Pica Communications in Camano Island, Wash. "They are taking away a less expensive option and replacing it with a more expensive option. This takes away a reasonable upgrade strategy for those who wanted to get the Enterprise Edition. We used it with customers and it was cost-effective, and it is no longer a cost-effective way to do that."

The standalone Windows Enterprise upgrade SKU list price is $295, said a Microsoft spokesperson. In comparison, a Windows 8.1 Pro license is $187, while a Windows 8.1 Enterprise upgrade with Software Assurance (SA) costs $296, according to an online Microsoft Windows licensing specialist. An SA annuity costs $109.

However, it could be good news for customers that want to use some Windows Enterprise features but can't commit to Microsoft SA, said Wes Miller, vice president of research at Directions on Microsoft, a consulting firm in Kirkland, Wash. The company recently published a research report about the new SKU.

This new option, available to organizations in the Open and Select/Select Plus programs, might make sense for retail businesses and point-of-sale terminals that still run Windows XP, according to Imran Shaikh, program director of IT at Vista Equity Partners in San Francisco. Windows XP's end of life occurs on April 8.

Large businesses with an enterprise agreement could not buy a PC without a Windows Pro OEM license, Shaikh said. Organizations would have to strip a PC and reimage it with an enterprise version of Windows under their Enterprise Agreement.

"The bundled OEM OS was a waste," Shaikh said. He added that although the change does not affect his own company, it could save some money for his organization's portfolio companies.

The caveat, however, is that enterprise IT must know exactly what features will be included for those who buy the standalone SKU compared with those who have the Windows Enterprise and SA combination.

Windows Enterprise changes

  • Out with the old: Windows Enterprise edition required an SA attached to a PC's Windows Pro edition license.
  • In with the new: IT can now purchase a standalone Windows Enterprise SKU, Windows Enterprise plus SA, or SA-only SKUs.

For example, use of the Microsoft Desktop Optimization Pack, which includes App-V, requires Software Assurance. Customers who want to use App-V will not be able to use the standalone Windows Enterprise pack.

Customers who renew their existing SA are not affected, and customers who previously bought Windows Pro Upgrade plus SA can buy Windows Enterprise Upgrade plus SA at the same price with equivalent use rights, a Microsoft spokesman said.

However, the licensing changes could be relevant to new PC purchases in the next several months. Organizations that purchase a PC with an OEM Windows Pro license before July 1, 2013, can attach SA within 90 days of purchase. For PCs acquired after July 1, 2014, customers will purchase SA and the Enterprise upgrade together, the spokesperson said.

Meanwhile, Microsoft also said it will drop the price of its Windows license to OEMs by 70% for devices that cost less than $250. Although it seems like good news, some observers see a potential downside.

Microsoft is decreasing the low-end Windows license while increasing the price of the Enterprise Edition to small volume-license accounts, DeGroot said.

"Business customers should be getting the message they are making up the difference, with Microsoft competing in the consumer side [by charging] business customers more," he said.

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Do you think the standalone Windows Enterprise SKU is more or less confusing for business?
It adds to the confusion. If Microsoft wants to sell Windows 8 to the Enterprise drop the price to forget SA. Give me some incentive to upgrade my 200 desktops off XP such as Win 8 Pro or Enterprise for $50 dollars a seat.
I hear you! Good suggestion, especially when you consider the costs for hardware and application upgrades related to moving your users off XP on to Windows 8.x. It all adds up.  
A testament that windows isn't the only OS to use.
Be straight with app vendors who only code their app for windows, move away from them and join our world where we aren't dependent of Microsoft OS

Very important to have a Linux or Mac or windows server and host your apps on it, divorce the OS issues..
Private fences cloud is where it's at.

If I use this SKU what am I really getting for the money?
Hard to understand the Windows Product Management team's decision to release a product with the knowledge and expectation that a portion of businesses will be required to 're-image' their machines to stay compliant with their Enterprise Agreement.  Puzzling.