Gartner Research

Understanding the Impact of Microsoft's "Cloud-First" Strategy on Licensing

Published: 20 May 2015

ID: G00274910

Analyst(s): Stephen White, Frances O'Brien

Summary

Microsoft's transition to a "cloud-first, mobile-first" strategy under CEO Satya Nadella has spawned new trends in cloud licensing. IT procurement professionals must review these trends and adapt strategies to deliver flexibility while maintaining the lowest sustained cost of licensing.

Table Of Contents
  • Impacts

Analysis

Impacts and Recommendations

  • Licensing Microsoft cloud-based and subscription-only products leads IT procurement to replace perpetual license rights with perpetual expenses
    • Subscription-Only Offerings Increase Lock In
    • Cloud-Only Innovation Limits the Business Benefits of On-Premises Solutions
    • Microsoft Has Rewritten the Rule Book With Azure
    • Cloud and Subscription Policies May Drive Microsoft Clients to Alternative Cloud Solutions
    • Cloud-First or Cloud-Only Strategies Eliminate Potential to Benefit from Longer Upgrade Cycles and Open the Door to Competitors
    • Evolving Competitive Landscapes Impact Partner and Client Relationships
  • Microsoft increases its share of the cloud market by using temporary discounts, resulting in the challenge of increasing costs at contract-renewal time for IT procurement
    • Buying Market Share — a Tried and True Strategy
    • One Customer's Carrot May Be Another's Stick
    • Add-Ons Limit Potential Short-Term Reduction in Revenue Caused by Subscriptions
    • Winning Hearts and Minds to Attract New Clients and Next-Generation Users
    • Infrastructure and Platforms Race to the Bottom

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