Plan Now for Upcoming 15% Microsoft User-Based CAL Price Increase

G00245860

Analyst(s):

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Summary

Microsoft’s indirect revelation of its planned 15% price increase for user-based Client Access Licenses contrasts with its communication over previous price hikes, and could surprise some customers with unexpected expenses.

News Analysis

Event

On 16 October 2012, Softcat, a Microsoft Large Account Reseller (LAR), announced in a blog post that Microsoft plans to increase the price of user-based Client Access Licenses (CALs). Starting 1 December 2012, the price of most user-based CALs will increase by 15%. This price increase will also impact the user-based Core CAL and Enterprise CAL Suites. The price of device-based CALs (including device-based Core CALs and Enterprise CAL Suites) will remain unchanged. CALS affected include:

  • Bing Maps Server CAL

  • Core CAL Suite

  • Enterprise CAL Suite

  • Exchange Server Standard and Enterprise CALs

  • Lync Server Standard and Enterprise CALs and Lync Plus CALs

  • Project Server CALs

  • SharePoint Server Standard and Enterprise CALs

  • System Center 2012 Client Management Suite

  • System Center Configuration Manager

  • System Center Endpoint Protection

  • Visual Studio Team Foundation Server CAL

  • Windows Multipoint Server CAL

  • Windows Server CAL

  • Windows Server Remote Desktop Services

  • Windows Server Rights Management Services

  • Windows Server Terminal Services CAL

Analysis

Currently, Microsoft licenses CALs at the same price by user or by device. But devices are proliferating among users, who may employ several to access Microsoft servers (in particular, Exchange email). According to Softcat, Microsoft believes that customers whose users access Microsoft offerings through multiple devices have been receiving more value from CALs than customers whose users depend on fewer devices. The price increase will enable Microsoft to profit from this trend.

In a departure from Microsoft's previous CAL price hikes in July 2007 and March 2011, when it provided customers with several months' advance notice regarding pricing changes to the CAL Suites, the company has not formally announced the change to its customers. Instead, Microsoft is relying on its business partners to break the news. Microsoft's messaging to its business partners is that they should use their own discretion in deciding whether they wish to inform their customers or to encourage early renewals from those customers with Volume Licensing agreements up for renewal between now and 1Q13, to avoid what some customers might consider a significant price increase.

Gartner agrees that some, but not all Microsoft customers may have received additional value from user-based CALs. But we believe that Microsoft’s silence and lack of advance notice to its customers may prove problematic for some organizations that rush to renew early simply to avoid a price increase. These price hikes — combined with licensing changes and the inherent cost implications for SQL 2012, System Center 2012, Windows Server 2012, and the price changes alluded to in Microsoft's 1 October 2012 Product Use Rights Document for SharePoint Server 2013 and Lync Server 2013 — could add unexpected expenses to some customers' budgets.

Recommendations

IT procurement professionals:

  • Contact your Microsoft representative or LAR to determine how the price increase will affect your licensing and expenses.

  • If your LAR has not proactively notified you of recent and upcoming Microsoft licensing changes, re-evaluate its capabilities to determine whether a different LAR would better serve your licensing requirements.

  • Do not renew any license agreement prematurely. Complete a full analysis of your environment before committing to another multiyear term.

  • If you are currently engaged in negotiations or plan an immediate purchase, act now to obtain any user-based CALs you may need to avoid the price hike.

  • Re-evaluate your CAL strategy to determine whether user- or device-based CALs, or a mixture of the two, are more appropriate and cost-effective for your organization.

Recommended Reading

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© 2012 Gartner, Inc. and/or its Affiliates. All Rights Reserved. Reproduction and distribution of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Although Gartners research may discuss legal issues related to the information technology business, Gartner does not provide legal advice or services and its research should not be construed or used as such. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The opinions expressed herein are subject to change without notice.

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