Why is Microsoft Licensing So Complex?

A guide to help you navigate the insanely complex and constantly changing maze of Microsoft licensing rules.

Top 8 Reasons Microsoft Licensing is Complex

Microsoft has a reputation for complex rules that make licensing its products products unreasonably difficult. But it’s not conspiracy and there are reasons.

1. Product Diversity

Microsoft products are foundational tools that most organizations have been using to run parts of their businesses for decades. Microsoft products are on users’ desktops, in the datacenter, in Microsoft’s cloud, and in competitor clouds. Very few vendors have such a wide range of offerings or touch so many users in an organization. Monetizing such a broad product portfolio requires “creativity.”

2. Inconsistency Across Products

One of the most challenging aspects of Microsoft licensing is the lack of consistency across Microsoft’s products. Microsoft consists of largely autonomous business units and no central authority with the power or mandate to impose licensing discipline. Customers dealing with licensing cannot assume the licensing rules for one product apply to other products.

3. Incomplete Licensing Rules

Microsoft tends to release new products before licensing details are complete. Customers who adopt products early may see subsequent licensing changes that negatively impact their budgets. Furthermore, it is not uncommon for the company’s licensing documentation to be out of date or somewhat in conflict with other documentation, or missing details necessary to determine how rules apply to a specific customer scenario.

4. Confusing Terminology

Microsoft is notorious for changing product names, sometimes legitimately, but often for marketing purposes. Similar-sounding names can refer to very different products (see all the different Defender and Copilot services for an endless number of examples). Furthermore, within Microsoft documentation, terms may be used that are never clearly defined or mean different things in different contexts. The same term or phrase can be used to refer to a bunch of different things, or several terms or phrases might be used to refer to the same thing. It can make your head hurt.

5. Multiple Packaging and Purchasing Options

Microsoft has numerous purchasing channels, designed to accommodate a variety of customer types, each with its own payment requirements and licensing conditions. Often, customers need to use more than one purchasing channel to meet licensing requirements and limitations, which adds to the complexity of licensing management. Couple this with multiple packaging choices (for example, suites versus stand-alone; cores versus Client Access Licenses), and an already complex licensing situation gets even messier.

6. Add-on Licenses

Back in the day, when most Microsoft products were on-premises and sold as perpetual licenses, new product features were introduced to entice customers to upgrade to the latest version (i.e., at no extra charge). Now, when most Microsoft products are in the cloud and sold as subscription licenses, new features are introduced as an add-on license. In addition to extra the costs, these add-ons subscriptions create more licensing complexity.

7. Missing Compliance Controls

There is a significant lack of built-in controls to ensure users are compliant with licensing rules in many Microsoft cloud services. The lack of controls means customers often run afoul of the rules, and often the only resolution is to buy additional subscriptions.

8. Tricky Legacy Transitions

Most customers have been purchasing Microsoft products for years, if not decades. This means they have legacy licenses that often need to be converted to modern subscription licenses. There are methods for retaining the benefit of older licenses, but it can require special negotiations, purchasing special transition licenses, and additional tracking and compliance concerns.

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