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Windows Server 2012 R2 Pricing and Licensing

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August 19, 2013
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[This report was edited after initial publication. See notes in italics below.]

Prices for Windows Server Datacenter licenses and Remote Desktop Services Client Access Licenses (CALs) will increase when Windows Server 2012 R2 becomes available later this year. Although some volume licensing contracts may delay the change, customers might need to plan ahead to exploit current pricing. However, new CALs will not be needed to upgrade from Windows Server 2012 to 2012 R2. Also, starting in Jan. 2014, customers with Software Assurance (SA) on Remote Desktop Services CALs may be able to save money if they move some types of remote desktop workloads to cloud hosters.

Windows Server 2012 R2 licenses will be generally available for sale in Nov. 2013, but the version might be available for download from Microsoft's Volume License Service Center several weeks before that. Customers who have SA on existing Windows Server licenses will be entitled to Windows Server 2012 R2 upgrades if SA is active the month the version becomes available for download. (SA is a subscription add-on to a license that provides rights to new product versions and other benefits; the annual SA fee for Windows Server licenses is 25% of the underlying license price.)

Licensing for Windows Server Largely Unchanged

The transition from Windows Server 2008 R2 to Windows Server 2012 involved substantial changes to the product's licensing model, edition lineup, and pricing. In contrast, with the exception of some pricing changes, licensing for Windows Server 2012 R2 remains almost identical to Windows Server 2012.

Windows Server continues to use a two-tiered licensing model. Server-side licenses provide the right to run one or more instances of Windows Server on server hardware, and three different types of CALs provide the right for users or end-user devices to access resources on the server.

Server-Side Licensing

As with its predecessor, Windows Server 2012 R2 continues to be offered in two general purpose server editions for midsize and large organizations: Standard and Datacenter. Both server editions use the same paired-processor licensing model. Regardless of edition, each license covers up to two physical processors on a single server (the number of cores inside each processor is immaterial) and each license can be assigned to one server only. Licensing two servers, each with a single processor, requires a total of two licenses, and licensing a server that contains four processors requires two licenses. (See the chart "Server-Side Licensing for Windows Server".)

Both server editions include the same technical features and capabilities and differ only with respect to virtualization use rights. The Datacenter edition license provides the right to run an unlimited number of virtual machines (VMs) on the licensed server, while each Standard edition license allows up to two Windows Server-based VMs.

Multiple Standard edition licenses can be assigned to a single server ("stacking") to increase the number of simultaneous VMs allowed. While this has been the least expensive licensing approach for scenarios involving 10 or fewer simultaneous VMs, it can be more expensive overall when the administrative overhead associated with software license compliance checks is factored in. During a compliance check, customers planning to assert that a server's virtualized Windows Server workloads are covered by stacking Standard edition licenses will likely be asked to demonstrate how the claim is supported. For example, the customer could show that technical constraints in place make it impossible for more than the licensed number of VMs to run simultaneously or that logs from the previous 90 days prove that the maximum number of licensed VMs was never exceeded.

Client-Side Licensing

Client access continues to be covered by three different types of CALs, all available either as User CALs or Device CALs, with User CALs costing 15% more than their Device CAL counterparts. The Windows Server CAL is mandatory and covers client use of all Windows Server capabilities except for Remote Desktop Services (RDS) and Rights Management Services (RMS), which are covered by the RDS CAL and RMS CAL, respectively, both optional. (See the chart "Client-Side Licensing for Windows Server".) Most importantly, Windows Server customers don't need to acquire new CALs to upgrade from Windows Server 2012 to 2012 R2: The Windows Server 2012 CAL, RDS 2012 CAL, and RMS 2012 CAL will license access to servers running Windows Server 2012 R2. (The same rule applied to Windows Server 2003 R2 and Windows Server 2008 R2.)

RDS let users interact over a network with applications executing on a remote server and supports two remote desktop delivery architectures—Remote Desktop Session Host (called Terminal Services in earlier versions of Windows Server) and Virtual Desktop Infrastructure (VDI). Using RDS components to implement either architecture requires RDS CALs, but RDS CALs are also required when a third-party alternative to Remote Desktop Session Host is used. For example, RDS CALs are required if Citrix XenDesktop is used to implement session-based remote desktops on Windows Server, even when the solution doesn't involve RDS components. This is the meaning of the entry in Microsoft's Product Use Rights (PUR) quarterly document that says an RDS CAL is needed to host "a graphical user interface (using the Windows Server 2012 Remote Desktop Services functionality or other technology)."

[Dec. 22, 2014 note: The licensing of RDS is covered in detail in Licensing Windows Server Remote Desktop Services.]

RMS uses encryption to prevent unauthorized users from opening documents, e-mail, and other protected data and enables applications to selectively enforce restrictions (for example, "do not print") for particular users. Commonly used to prevent casual or inadvertent disclosure of Office documents and e-mail, RMS protection travels with content and thus can work even if the content is moved to a computer outside an organization's control. Both creation and viewing of rights-protected content requires an RMS CAL.

Prices Rising but Quick Action Can Mitigate Effects

Datacenter edition licenses and RDS CAL prices will increase substantially in Nov. 2013, when Windows Server 2012 R2 becomes generally available. This will encourage some customers to accelerate license purchases. However, the options and timetable for obtaining the current lower prices depends on what type of volume licensing program the customer uses for purchases and the length of time remaining on the current contract.

Datacenter edition license. The cost of a Datacenter edition license will go up 28%, from US$4,809 to US$6,155, when Windows Server 2012 R2 becomes generally available in Nov. 2013. The price of a Windows Server 2012 R2 Standard edition license will remain the same at US$882. (Prices, quoted in U.S. dollars, are for licenses purchased without SA through the Open License program and represent the highest price a U.S. customer would pay when purchasing through volume licensing.)

For customers with SA on existing Windows Server Datacenter licenses, annual SA payments will remain unchanged for the duration of the current SA coverage period. However, the first time SA is renewed after Nov. 2013, annual fees will be recalculated based on the new, higher Datacenter license price.

Prices for the following offerings will also go up with Datacenter:

  • The Core Infrastructure Server (CIS) Datacenter license, a discounted bundle of licenses for the latest versions of Windows Server Datacenter and System Center Datacenter
  • The Windows Server Standard-to-Datacenter Step-up, which allows SA customers to exchange one Standard edition license for one Datacenter edition license.

RDS CAL. The cost of an RDS 2012 CAL will go up 20% in Nov. 2013. RDS 2012 User CALs will rise from US$98 to US$118, and Device CALs from US$85 to US$102. As with Datacenter server licensing, customers with SA on RDS CALs renewing after Nov. 2013 will be subject to higher annual SA payments.

Select and Open License Purchases Impacted First

For new license purchases made through Select and Open License Programs, SA is optional. Starting Nov. 2013, the higher Windows Server prices will go into effect for Select and Open License program customers buying new licenses or new licenses with SA, or renewing expiring SA coverage periods.

For customers using Select and Open, accelerating Datacenter purchases could make sense in two scenarios.

Customer intends to use Windows Server 2012 or earlier. Customers who purchase a Windows Server Datacenter license without SA before Nov. 2013 will get rights to use Windows Server 2012 (and earlier, via downgrade rights), but not Windows Server 2012 R2. Thus, customers with no plans to deploy Windows Server 2012 R2 could save by purchasing licenses sooner rather than later.

Customer wants SA coverage. A customer considering whether to buy a Datacenter license with SA just before Nov. 2013 or a short time afterward will obtain better pricing by purchasing earlier at the current lower price. However, if a customer is choosing between buying a license with SA today (to get rights to Windows Server 2012 R2) and buying the license-only (that is, without SA) later under the new price, the license-only option is more cost-effective.

For RDS CALs, it always makes sense to purchase before Nov. 2013, if at all possible, because of Windows Server's no-new-CALs-for-R2-releases policy. RDS 2012 CALs purchased before Nov. 2013 will be less expensive and will provide the right to access RDS running on Windows Server 2012 R2.

Enterprise Agreement Customers Have More Time

For Enterprise Agreement (EA) customers, the timetable may be somewhat different. The timing of some actions is driven by the Windows Server 2012 R2 Nov. 2013 general availability date, while others can be driven by the customer's EA enrollment expiration date.

Before Nov. 2013. Unlike customers who use the Select and Open programs, customers who have EAs have the ability to lock in a price for the duration of an enrollment term. This policy applies to all types of EA enrollments, including the Enterprise Enrollment (classic desktop enrollment), Enrollment for Application Platform (EAP), and Enrollment for Core Infrastructure (ECI). For example, the first time a customer purchases a Windows Server Datacenter license as an Additional Product under any of these enrollments, that license type is added to the customer's EA price sheet at the then-current price, even if the customer purchases only a single unit. The price thereafter remains unchanged for subsequent purchases through the end of the EA enrollment.

Customers who haven't already purchased licenses for Windows Server Datacenter, the Windows Server Standard-to-Datacenter Step-up, CIS Datacenter, or the RDS CAL should consider purchasing at least a single license before Nov. 2013, which will lock in the current price for the duration of the EA enrollment term.

Before the end of the current EA enrollment term. When an EA enrollment is renewed, the customer's price sheet is updated to reflect the products available and associated prices as of the date of renewal. As a result, EA customers are generally better off purchasing Datacenter licenses and RDS CALs prior to the end of current agreements.

RDS CALs to Get New Software Assurance Benefit

RDS CALs with active SA will receive new rights for session-based remote desktops hosted by service providers. As explained above, RDS CALs can license remote desktops that run on Windows Server's Remote Desktop Session Host services, or a third-party alternative, such as Citrix XenDesktop session desktops. Currently, RDS CALs may be used only for session-based remote desktops that are deployed on on-premises servers, or on dedicated servers (not shared with other customers) of a third-party service provider. By early 2014, RDS CALs with active SA will also be valid for workloads running on shared (multitenant) servers of service providers (although the VM running the workload must be for the exclusive use of the particular customer). For customers who have RDS CALs with SA, this change could result in significant licensing savings.

Existing rule. Under current rules, the only way to license session-based remote desktops deployed on third-party shared servers is through the provider's Service Provider License Agreement (SPLA). Under the SPLA, service providers account for software used by customers and remit monthly payments to Microsoft. In this specific scenario, the provider has to pay two separate monthly fees to Microsoft: a processor-based SPLA fee for Windows Server (which covers running the software on a server and having it accessed by clients) and a user-based SPLA fee, called a RDS Subscriber Access License (SAL), which covers client use of session-based remote desktops.

New rule. Under the new rule, a third-party service provider will continue licensing Windows Server per-processor through SPLA. However, RDS SALs won't be required for shared servers if a customer already owns RDS CALs covered by active SA. These CALs will license client access to the customer's session-based remote desktops running on the provider's shared servers. The RDS CAL SA benefit will apply to session-based remote desktops deployed on Microsoft's own Windows Azure hosted service as well. (The ability to run such workloads on Windows Azure is a recent development: on July 1, 2013, Microsoft lifted its restriction prohibiting Windows Azure VMs from hosting session-based remote desktops.)

[Jan 6. 2014 note: This new SA benefit for RDS CALs was officially documented in the Jan. 2014 Product Use Rights (PUR) document, available via a link on www.microsoft.com/licensing/about-licensing/product-licensing.aspx#tab=1. The Jan. 2014 PUR clearly states the SA benefit applies to RDS User CALs only, and not to RDS Device CALs. Microsoft’s initial public disclosure in mid-2013 simply referred to the “RDS CAL” without indicating that purchase type—User or Device—was of relevance.]

Implications. RDS CAL SA payments are roughly half the cost of SPLA fees for a RDS SAL. This means a customer with SA on RDS CALs is much better off financially than an RDS SAL customer, if the service provider passes along the full savings. However, third-party service providers must be "Authorized Mobility Partners," and customers will have to fill out a special validation form before they can avail themselves of the RDS CAL SA benefit.

Still No Way for Hosters to Provide VDI on Shared Servers

An alternative to session-based remote desktops is VDI. With VDI, each user's desktop (including the OS, applications, and user data) executes in its own VM, hosted on a centrally managed server. Each hosted VM runs a business edition of the Windows client OS, such as Windows 7 or 8 Professional or Enterprise edition. With the session-based remote desktop architecture, in contrast, all users' Windows desktop applications (and desktops) run on the same (shared) instance of Windows Server; Windows Server mimics the "look" of the Windows client OS, but no instances of the client OS actually run on the server.

Under current rules, VDI workloads may only be run on customers' on-premises hardware or on third-party service provider equipment that is dedicated to the particular customer. Running VDI workloads on a service provider's shared (multitenant) hardware is prohibited, and no changes to this rule have been announced.

Resources

Windows Server 2012 R2 pricing and licensing information is at download.microsoft.com/download/F/3/9/F39124F7-0177-463C-8A08-582463F96C9D/Windows_Server_2012_R2_Licensing_Datasheet.pdf.

A Windows Server 2012 R2 Remote Desktop Services brief is available at download.microsoft.com/download/9/2/4/92409CFC-1AAB-4330-8B0B-E0CEC90B8295/Windows_Server_2012_R2_Remote_Desktop_Services_FAQ.pdf.

Windows Server 2012 licensing is covered in "Windows Server 2012 Editions and Licensing Changes" on page 16 of the Aug. 2012 Update, "Windows Server Customers Face Licensing Decisions" on page 18 of the Aug. 2012 Update, and "Windows Server 2012 Licensed for Web" on page 18 of the Nov. 2012 Update.

Windows Server 2012 licensing briefs are posted at download.microsoft.com/download/0/4/B/04BD0EB1-42FE-488B-919F-3981EF9B2101/WS2012_Licensing-Pricing_Datasheet.pdf and download.microsoft.com/download/4/D/B/4DB352D1-C610-466A-9AAF-EEF4F4CFFF27/WS2012_Licensing-Pricing_FAQ.pdf.

Windows Server 2008 R2 licensing was covered in the Nov. 2009 Licensing Outline, "Windows Server 2008 R2 Packaging, Licensing, Pricing."

CIS offerings and the ECI program are covered in "Licensing Windows Server and System Center Together" on page 21 of the July 2013 Update.

Rules for reassigning server-side licenses from on-premises to third-party service providers are discussed in "Enterprise Cloud Licensing Rules Clarified" on page 22 of the Aug. 2011 Update.

The introduction of a price differential between User and Device CALs for multiple server products was discussed in "Per-User CAL Prices Raised 15%" on page 16 of the Dec. 2012 Update.