Gartner Research

Minimize the Impact of Microsoft’s October 2018 Price Increases and Programmatic Discount Changes

Published: 04 September 2018

ID: G00369044

Analyst(s): Dolores Ianni , James Smith , Marie Sienkowski , Stephen White , Pamela Wheelwright , Ben Jepson , Michael Silver

Summary

Sourcing, procurement and vendor management leaders must prepare now for Microsoft’s October 2018 price increases and programmatic discount changes. This research will help clients to assess and minimize the risks and costs, and develop effective license purchase and renewal strategies.

Table Of Contents
  • Impacts

Analysis

Impacts and Recommendations

  • Microsoft Is Removing Programmatic Level A Volume Discounts
    • EA Customers Are Protected Until Renewal — but Must React to These Increases Well Before Renewal
    • Create Cost Models to Determine Savings From Early Purchases of LSA, SA Renewal or Subscription Licenses Outside EAs
    • Some Regions Will See a Magnified Price Increase
    • Government Clients Can Expect a 3% to 18% Price Increase for Certain Online Services and Up to a 32% Increase Under Open Programs
  • Removal of the Level C Discount Under Open Contract Variants Will Increase Pricing for SMBs by 2% to 10%
    • Accelerate Planned License-Only Purchases to Close Prior to the 1 October Increases
    • Elimination of Open Level C, EA/Select and MPSA Level A Discounts May Increase CSP Adoption
  • Increased On-Premises Pricing for Specific Products Makes Microsoft’s Priority and Premium Offerings Comparatively More Attractive
    • Certain Products Have Seen More Frequent Price Increases Than Others
    • Windows 10 Enterprise E3 Per-Device Price Increase Combined With Office and CAL Suite Price Increases Could Increase M365 Bundle Adoption
    • Consider Mixing Subscriptions to Optimize License Costs at Renewal
    • When Renewing On-Premises, Evaluate Whether You Need SA on All Products
    • Microsoft’s Price Increase for Windows Server Standard Lowers the Break-Even Point for VMs per Host, Shifting Focus to Windows Server Datacenter Sales

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