Microsoft has this week announced licensing changes that raise the cost of its software for customers using Amazon Web Services (AWS), Alibaba Cloud, and Google Cloud. In doing so, Microsoft has arguably found a way to hurt its cloud rivals.

Changes were made to licensing alongside the launch of Azure Dedicated Host, a new physical server hosted on Azure that can only be used by one customer. Microsoft says the server is for running Azure virtual machines.

Two dedicated host specifications are available. Type 1 Azure Dedicated Host is based on a 2.3GHz Intel Xeon E5-2673 v4 (Broadwell), has 64 vCPUs (Virtual CPUs), and costs $4.055 or $4.492 per hour depending on RAM (256GB or 448GB). Type 2 is based on the Xeon Platinum 8168 (Skylake) with 72 vCPUs and 144GB RAM for $4.039 each hour.

Those prices exclude the licensing costs, which is where Microsoft is now putting a squeeze on cloud rivals. Under previous licensing costs, customers could use on-premises licenses from other cloud providers on their dedicated services. That is now changing according to Microsoft:

“The emergence of dedicated hosted cloud services has blurred the line between traditional outsourcing and cloud services and has led to the use of on-premises licenses on cloud services. Dedicated hosted cloud services by major public cloud providers typically offer global elastic scale, on-demand provisioning and a pay-as-you-go model, similar to multitenant cloud services.

“As a result, we’re updating the outsourcing terms for Microsoft on-premises licenses to clarify the distinction between on-premises/traditional outsourcing and cloud services and create more consistent licensing terms across multitenant and dedicated hosted cloud services. Beginning October 1, 2019, on-premises licenses purchased without Software Assurance and mobility rights cannot be deployed with dedicated hosted cloud services offered by the following public cloud providers: Microsoft, Alibaba, Amazon (including VMware Cloud on AWS), and Google. They will be referred to as “Listed Providers.””

Details

Microsoft has provided a FAQ that you can read here (PDF). For customers, software that has previously been allowed on dedicated host servers will no longer work. As a result, organizations will have to rent software or buy licenses with software assurance.

Microsoft’s licensing changes will have a bad affect on AWS and Google Cloud. The Amazon Workspaces virtual desktop will be affected as Microsoft is removing the current options were you “can use your own licensed [Microsoft] software on dedicated infrastructure, even without Software Assurance”.