Tag Archives: licensing

Licensing Azure Stack: it’s complicated (and why Azure Stack is the iPad of servers)

Microsoft’s Azure Stack is a pre-configured, cut-down version of Microsoft’s mighty cloud platform, condensed into an appliance-like box that you can install on your own premises.

Azure Stack is not just a a new way to buy a bunch of Windows servers. Both the technical and the business model are different to anything you have seen before from Microsoft. On the technical side, your interaction with Azure Stack is similar to your interaction with Azure. On the business side, you are buying the hardware, but renting the software. There is no way, according to the latest pricing and licensing guide, to purchase a perpetual license for the software, as you can for Windows Server. Instead, there are two broad options:


In this model, you buy software services on Azure Stack in exactly the same way as you do on Azure. The fact that you have bought your own hardware gets you a discount (probably). The paper says “Azure Stack service fees are typically lower than Azure prices”.

Base virtual machine $0.008/vCPU/hour ($6/vCPU/month)
Windows Server virtual machine $0.046/vCPU/hour ($34/vCPU/month)
Azure Blob Storage $0.006/GB/month (no transaction fee)
Azure Table and Queue $0.018/GB/month (no transaction fee)
Azure App Service (Web Apps, Mobile Apps, API Apps, Functions) $0.056/vCPU/hour ($42/vCPU/month)

This has the merit of being easy to understand. It gets more complex if you take the additional option of using existing licenses with Azure Stack. “You may use licenses from any channel (EA, SPLA, Open, and others),” says the guide, “as long as you comply with all software licensing and product terms.” That qualification is key; those documents are not simple. Let’s briefly consider Windows Server 2016 Standard, for example. Licensing is per core. To install Windows Server 2016 Standard on a VM, you have to license all the cores in the physical server, even if your VM only has one virtual CPU. The servers in Azure Stack, I presume, have lots of cores. Even when you have done this, you are only allowed to install it on up to two VMs. If you need it on a third VM, you have to license all the cores again. Here are the relevant words:

Standard Edition provides rights for up to 2 Operating System Environments or Hyper-V containers when all physical cores in the server are licensed. For each additional 1 or 2 VMs, all the physical cores in the server must be licensed again.

Oh yes, and once you have done that, you need to purchase CALs as well, for every user or device accessing a server. Note too that on Azure Stack you always have to pay the “base virtual machine” cost in addition to any licenses you supply.

This is why the only sane way to license Windows Server 2016 in a virtualized environment is to use the expensive Datacenter edition. Microsoft’s pay-as-you-use pricing will be better for most users.

Capacity model

This is your other option. It is a fixed annual subscription with two variants:

App Service, base virtual machines and Azure Storage $400 per core per year
Base virtual machines and Azure Storage only $144 per core per year

The Capacity Model is only available via an Enterprise Agreement (500 or more users or devices required); and you still have to bring your own licenses for Windows Server, SQL Server and any other licensed software required. Microsoft says it expects the capacity model to be more expensive for most users.

SQL Server

There are two ways to use SQL Server on Azure. You can use a SQL database as a service, or you can deploy your own SQL Server in a VM.

The same is true on Azure Stack; but I am not clear about how the licensing options if you offer SQL databases as a service. In the absence of any other guidance, it looks as if you will have to bring your own SQL Server license, which will make this expensive. However it would not surprise me if this ends up as an option in the pay-as-you-use model.

Using free software

It is worth noting that costs for both Azure and Azure Stack come way down if you use free software, such as Linux rather than Windows Server, and MySQL rather than SQL Server. Since Microsoft is making strenuous efforts to make its .NET application development framework cross-platform, that option is worth watching.


You will have to get support for Azure Stack, since it is not meant to be user-serviceable. And you will need two support contracts, one with Microsoft, and one with your hardware provider. The hardware support is whatever you can negotiate with the hardware vendor. Microsoft support will be part of your Premier, Azure or Partner support in most cases.

Implications of Azure Stack

When Microsoft embarked on its Azure project, it made the decision not to use System Center, its suite of tools for managing servers and “private cloud”, but to create a new way to manage servers that is better automated, more scalable, and easier for end-users. Why would you use System Center if you can use Azure Stack? Well, one obvious reason is that with Azure Stack you are ceding a lot of control to Microsoft (and to your hardware supplier), as well as getting pushed down a subscription path for your software licensing. If you can handle that though, it does seem to me that running Azure Stack is going to be a lot easier and more productive than building your own private cloud, for most organizations.

This presumes of course that it works. The big risk with Azure Stack is that it breaks; and your IT administrators will not know how to fix it, because that responsibility has been outsourced to your hardware vendor and to Microsoft. It is possible, therefore, than an Azure Stack problem will be harder to solve than other typical Windows platform failures. A lot will depend on the quality control achieved both by Microsoft, for the software, and its hardware partners.

Bottom line: this is the iPad of servers. You buy it but don’t really control it, and it is a delight to use provided it works.

The pros and cons of subscription vs perpetual licenses

Adobe has caused a stir with its announcement that Creative Suite will no longer be available under a perpetual license, for versions beyond the current Creative Suite 6.

Given this, the CC applications will be available only as part of Creative Cloud. We will continue to sell and support Adobe Creative Suite® 6 applications, and will provide bug fixes and security updates as necessary. We do not, however, have any current plans to release new versions of our CS applications.

Although the company tends to portray this as a move to the cloud, that is not accurate. Applications like Photoshop, Dreamweaver and InDesign remain desktop applications, though there are some cloud-like benefits like collaboration and settings synchronisation. The big difference is that you will no longer be able to buy the latest versions outright, but only by subscribing to Creative Cloud. Once your subscription lapses, you can no longer use them.

What the pros and cons? Let’s start with the positives:

  • Subscription income is good for the vendor, because it is predictable and continuous.
  • The vendor is relieved from the pressure of the upgrade cycle: having to come up with new features every eighteen months (or whatever the product cycle is) that are sufficiently compelling to persuade existing users to pay for another round of upgrades. Instead, it can take an iterative approach, more inline with Agile development methodology that prefers iterative development to big releases where many things change at once. At best, this could mean that software vendors focus more on what users want to see improved, rather than working with the marketing department on how to design a new look and features that will drive upgrades.
  • Customers can save money if they they do not need the product continuously.
  • Users always have the latest version of the software.
  • While subscribed, users have a relationship with the vendor that includes some level of service. Your software is never out of support (though a product could be withdrawn, as may happen to Adobe Fireworks which is not being updated).

Negatives? There are a few.

  • Customers may end up paying more. Most companies will calculate subscription costs such that the overall income is at least the same and probably higher than with outright sales, otherwise shareholders will not be happy. The kind of user who is happy to skip upgrades for a version or two will lose most.
  • Users have an ongoing dependency on the vendor. If the vendor discontinues the service for any reason, you no longer have the software. Depending on how the subscription is enforced technically, this injects some uncertainty into whether the software you use today will still be there to use tomorrow. Put another way, this is not going to work unless you have a high level of trust and confidence in the vendor.
  • Customers lose the psychological satisfaction of software ownership. No more “it’s mine, all mine”. You are now renting.
  • The vendor, financially secure thanks to continuing subscription income, may lose the incentive to work energetically on improving the software. Of course if there is a rival subscription service with a similar offering, the competitive drive continues, but that is not always the case.
  • Vendors could lose sales if customers are unwilling to buy by subscription, and turn to competitors who still offer perpetual licenses.

Software by subscription is not new. Customers on schemes such as software assurance also have something similar, though it is different because the license in that case may be perpetual – you can continue to use it even if you drop out of the software assurance scheme.

Today though, fast data connections and always-on internet make software by subscription easier to manage for both customers and vendors. Vendors that can successfully move to this model will want to do so, as for the vendor there are no disadvantages other than the risk mentioned above, that customers will not be willing to subscribe. Get used to it.