Microsoft increases prices for Office products – time to chat with your sales rep

Microsoft customers probably didn’t enjoy reading about the new prices for Office 2013 products that are reportedly on the way from December 1. The date is important because that’s when the Office 2013 versions of applications like Exchange, SharePoint, Lync, and so on are added to Microsoft’s price list and sales representatives have the chance to share the information with their customers.

Microsoft is also changing how client access licenses (CALs) are priced, which creates further potential for CIOs to receive higher bills from Microsoft. In this case, the change seems to make excellent business sense from the Microsoft perspective because it reflects the fact that people tend to use multiple devices to access servers today. Anyone looking at the proliferation of iOS, Android, and Windows Phone devices and now Windows RT Surfaces, will rapidly realize just how many devices can connect to servers like Exchange. If people use more than one device, then it makes sense to license on a per-user rather than device basis.

Interpreting the number of CALs that you need to buy can be a murky business. According to Microsoft’s web site (covering up to Exchange 2010, no details are yet available for Exchange 2013):

“Exchange requires a CAL for each user or device that accesses the server software.”

Exchange 2010 supports both device and user CALs, with a user CAL usually costing about a third more than a device CAL. I wonder how many organizations really understand the usage pattern that drives the correct combination of these CALs. For example, do they count up the number of ActiveSync partnerships that exist for each mailbox and use that as the basis of determining the number of CALs they should report to Microsoft. My guess is that few do, probably through lack of guidance from Microsoft and knowledge on the part of customers. Steve Goodman’s article on is a good place to start if you really want to find out just how many ActiveSync partnerships are in use. Of course, if your company is large enough, you’ve probably done a great deal with Microsoft to allow just about any number of devices to connect to Exchange as you’d like.

But then we come to the old standard CAL versus enterprise CAL debate and the confusion that exists around that calculation, which is based on the features that you actually use within the product. For example, if you use database-based journaling, you need standard CALs, but if you switch on per-user journaling, costs dramatically increase because enterprise CALs are now required. Exchange 2010 includes a script that’s supposed to give guidance on the topic, but the script has experienced logical and arithmetic difficulties in the past and its output should not be relied upon. You can download a better version of the script from Microsoft, but even so, its calculations should only be regarded as a starting point.

Of course, when you’re calculating CALs in an Exchange environment, you can’t forget to include the licenses needed for Windows and Outlook (or Office). Exchange 2003 used to include the Outlook CAL, but Microsoft removed this valuable right when they shipped Exchange 2007, much to the fury (at the time) of the Exchange community. We’ve now forgotten that Exchange used to always include client software with the server (remember the first MAPI Viewer client included with Exchange 4.0?). I guess removing Outlook from the mix simplified matters, or maybe it just increased profits.

Those addicted to conspiracy theories might conclude that increasing prices for on-premises products is simply a not-so-subtle hint from Microsoft that now’s a good time to consider moving all or part of your work to the cloud. Of course, Microsoft hopes that you’ll select Office 365 as the natural landing point for anyone who uses on-premises versions of the Office products today, but any price increase can force customers to review the other options that are available, such as Google Apps. After all, if you’re going into the cloud, you might as well check out the competitors.

Another possible downside of all the FUD around licensing is that customers will simply refuse to move from their current versions to upgrade to Office 2013 any time soon. This won’t come as good news to Microsoft because they like to create a flood of feel-good PR when new software is adopted quickly, which obviously can’t happen if customers dig in their heels and say “hell no, I’m not going” because of increased prices.

Like anything else to do with selling, negotiation is always possible and I imagine that many customers will soon be talking to their Microsoft representative to understand exactly what the pricing changes mean to them and how it will influence deployment plans over the next few years. Software licensing is a complex area. It certainly pays to be prepared by understanding exactly what server software you need and how many CALs are necessary across all the various products in use. Equipped with that knowledge, at least you’ll have some data to base a discussion about list prices, discounts, and timing when the nice person from Microsoft turns up to spread the good news.

Follow Tony @12Knocksinna


About Tony Redmond

Lead author for the Office 365 for IT Pros eBook and writer about all aspects of the Office 365 ecosystem.
This entry was posted in Email, Exchange, Exchange 2010, Exchange 2013, Office 365, Outlook and tagged , , , , . Bookmark the permalink.

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