The Complex World of Microsoft Licensing with Wes Miller

Wes Miller analyzes and writes about Microsoft security, identity, and systems management technologies, as well as Microsoft product licensing.

Before joining Directions on Microsoft in 2010, Wes was a product manager and development manager for several Austin, TX, start-ups, including Winternals Software, acquired by Microsoft in 2006. Prior to that, Wes spent seven years at Microsoft working as a program manager in the Windows Core Operating System and MSN divisions.

Wes received a B.A. in psychology from the University of Alaska Fairbanks.

Announcer: Hello, and welcome to Screaming in the Cloud with your host, Chief Cloud Economist at The Duckbill Group, Corey Quinn. This weekly show features conversations with people doing interesting work in the world of cloud, thoughtful commentary on the state of the technical world, and ridiculous titles for which Corey refuses to apologize. This is Screaming in the Cloud.

Corey: Welcome to Screaming in the Cloud, I’m Corey Quinn. So, I write a newsletter called Last Week in AWS, which has always felt like it’s flying a little bit too close to the sun just because having AWSes name in the title of what I do feels like it’s playing with copyright fire. It’s nice periodically to talk to someone—again—who is in a similar boat. Wes Miller is a Research VP at Directions on Microsoft. To be clear, Directions on Microsoft is an analyst firm that talks primarily about Microsoft licensing and is not, in fact, part of Microsoft itself. Have I disclaimed that appropriately, Wes?

Wes: You have. You have. And in fact, the company, when it was first born, was actually called Microsoft Directions. And they had a reasonably good relationship with Microsoft at the time and Microsoft cordially asked them, “Hey, could you at least reverse that so it corrects it in terms of trademark.” So yes, we’re blessed in that regard. Something you probably would never get away with now, but that was 30 years ago.

Corey: [laugh]. And now it sounds like it might as well be a product. So, I have to ask, just because the way I think of you is, you are the folks to talk to, full stop, when you have a question about anything that touches on Microsoft licensing. Is that an accurate depiction of what it is you folks do or is that just my particular corner of the world and strange equivalence that gets me there?

Wes: That is our parts of the Venn diagram intersecting because that’s what I spend a lot of time talking about and thinking about because I teach that with our company founder, Rob Horwitz. But we also spend an inordinate amount of time taking what Microsoft is talking about shipping, maybe servicing, and help customers understand really, as we say, the ‘So, what?’ What does this mean to me as a customer? Should I be using this? Should I be waiting? Should I upgrade? Should I stay? Those sorts of things.

So, there’s a whole roadmapping side. And then we have a [laugh]—because licensing doesn’t end with a license, we have a whole side of negotiation that we spend a lot of time, we have a dedicated team that focuses on helping enterprise agreement customers get the most successful deal for their organization, basically, every three years.

Corey: We do exactly that with AWS ourselves. I have to ask before we dive into this. In the early days, I felt like I had a much better relationship with Microsoft. Scott Guthrie, the head of Azure, was on this show. A number of very highly placed Microsoft folks were here. And over the years, they more or less have stopped talking to me.

And that leaves me in a position where all I can see is their actions and their broad public statements without getting any nuance or context around any of it. And I don’t know if this is just a commentary on human nature or me in particular, but I tend to always assume the worst when things like that happen. So, my approach to Microsoft has grown increasingly cynical over the years as a result. That said, I don’t actually have an axe to grind with them from any other perspective than as a customer, and occasionally that feels like ‘victim’ for a variety of different things. What’s your take on Microsoft as far as, I guess, your feelings toward the company?

Wes: So, a lot of people—in fact, it used to be more so, but not as much anymore, people would assume I hate Microsoft or I want to demonize Microsoft. But the irony actually is, you know, I want people to remember I worked there for seven-and-a-half years, I shipped—I was on the team that shipped Windows XP, Server 2003, and a bunch of other products that people don’t remember. And I still care about the company, but the company and I are obviously in different trajectories now. And also, my company’s customers today are also Microsoft’s customers today, and we actually have—our customers—our mutual customers—best interest in mind with basically everything we do. Are we helping them be informed? Are we helping them color within the financial lines?

And sometimes, we may say things that help a customer that aren’t helping the bottom line or helping a marketing direction and I don’t think that resonates well within Microsoft. So sure, sometimes we even hear from them, “Hey, it’d be great if you guys might want to, you know, say something nice once in a while.” But it’s not necessarily our job to say nice things. I do it once in a while. I want to note that I said something nice about AAD last week, but the reality is that we are there to help our mutual customers.

And what I found is, I have found the same thing to be true that you’re finding true that, unfortunately, outbound communications from them, in particular from the whole company, have slowed. I think everybody’s busier, they’ve got a very specific set of directions they’re going on things, and as a result, we hear very little. And even getting, trying to get clarification on things sometimes, “Did we read that right?” It takes a while, and it has to go through several different rungs of people to get the answer.

Corey: I have somewhat similar relationships over the years with AWS, where they—in many cases, a lot of their executives prefer not to talk to me at all. Which again, is fair. I’m not—I don’t require any of them to do it. But there’s something in the Amazonian ethos that requires them to talk to customers, especially when customers are having a rough time. And I’m, for better or worse, the voice of the customer.

I am usually not the dumbest person in the universe when it comes to trying to understand a service or make it do something that, to me, it seems that it should be able to do. And when I actually start having in-depth conversations, people are surprised. “Wow, you were super pleasant and fun to work with. We thought you were just going to be a jerk.” It’s, yeah, it turns out I don’t go through every meeting like it’s Twitter. What a concept.

Wes: Yeah, a lot of people, I’ve had this happen for myself when you meet people in person, when they meet your Twitter persona, especially for someone who I think you and I both come across as rather boisterous, gregarious, and sometimes people take that as our personas. And I remember meeting a friend in the UK for the first time years ago, he’s like, “You’re very different in person.” I’m like, “I know. I know.”

Corey: I usually get the, “You’re just like Twitter.” In many respects, I am. Because people don’t always see what I’m putting down. I make it a point to be humorous and I have a quick quip for a lot of things, but it’s never trying to make the person I’m engaging with feel worse for it. And that’s how I work.

People are somewhat surprised when I’m working in client meetings that I’m fun and I have a similar sense of humor and personality, as you would see on Twitter. Believe it or not, I haven’t spent all this time just doing a bit. But they’re also surprised that it tends to drive toward an actual business discussion.

Wes: Sure.

Corey: Everything fun is contextual.

Wes: Absolutely. That’s the same sort of thing we get on our side when we talk to customers. I think I’ve learned so much from talking with them that sometimes I do get to share those things with Microsoft when they’re willing to listen.

Corey: So, what I’m curious about in the context of Microsoft licensing is something that, once again, it has intruded upon my notice lately with a bunch of security disclosures in which Microsoft has said remarkably little, and that is one of the most concerning things out there. They casually tried to slide past, “Oh, yeah, we had a signing key compromised.” Which is one of those, “Oh, [laugh] and by the way, the building’s on fire. But let’s talk about our rent [unintelligible 00:07:44] for the next year.” Like, “Whoa, whoa, whoa. Hold on. What?”

That was one of those horrifying moments. And it came out—I believe I learned about this from you—that you needed something called E3 licensing—sorry, E5 licensing—in order to look at those audit logs, where versus E3, which sounded like the more common case. And after a couple of days of, “Explain this,” Microsoft very quickly wound up changing that. What do all these things mean? This is sort of a foreign concept to me because AWS, for better or worse, does not play games with licensing in the same way that Microsoft does.

Wes: Sure. Microsoft has, over the years, you know, they are a master of building suites. This is what they’ve done for over 30 years. And they will build a suite, they’ll sell you that suite, they’ll come back around in three to six years and sell you a new version of that suite. Sometimes they’ll sell you a higher price version of that suite, et cetera.

And so, you’ll see products evolve. And did a great podcast with my colleagues Rob and Mary Jo Foley the other day where we talked about what we’ve seen over the last, now for me, 11 years of teaching boot camps. And I think in particular, one of the changes we have seen is exactly what you’re being exposed to on the outside and what a lot of people have been complaining about, which is, products don’t sit still anymore. So, Microsoft actually makes very few products today. Almost everything they sell you is a service. There are a handful of products still.

These services all evolve, and about every triennium or two—so every three to six years—you’ll see a price increase and something will be added, and a price increase and something will be added. And so, all this began with the BPOS, the first version of Office 365, which became Office 365 E3, then Microsoft 365 E3 then Microsoft 365 E5. And for people who aren’t in the know, basically, that means they went from Office as a subscription to Office, Windows, and a bunch of management tools as a subscription, to E5, basically, it took all of the security and compliance tools that many of us feel should have been baked into the fundamentals, into E3, the thing that everybody buys, what I refer to still today as the hero SKU and those security and compliance fundamentals should have been baked in. But no, in fact, a lot of customers when this AAD issue came out—and I think a lot discovered this ad hoc for the same reason, “Hey, we’ve been owned, how far back in the logs can we look?” And the answer is, you know, no farther than 90 days, a lot of customers hit that reality of, what do you mean we didn’t pay for the premium thing that has all the logging that we need?

Corey: Since you sat on this for eight months before mentioning it to us? Yeah.

Wes: Exactly, exactly. And it’s buried. And it’s one of those things that, like, when we teach the licensing boot camp, I specifically call out because of my security background, it’s an area of focus and interest to me. I call out to customers that a lot of the stuff we’ve been showing you has not questionable valuable, but kind of squishy value.

This piece right here, this is both about security and compliance. Don’t cheap out. If you’re going to buy anything, buy this because you’re going to need it later. And I’ve been saying that for, like, three years, but obviously only the people who were in the boot camp would hear that and then shake their head;, “Why does it have to be this difficult?” But yeah. Everything becomes a revenue opportunity if it’s a potential to upsell somebody for the next tier.

Corey: The couple of times I’ve been asked to look at Azure bills, I backed away slowly as soon as I do, just because so much of it is tied to licensing and areas that are very much outside of my wheelhouse. Because I view, in the cloud context, that cost and architecture tend to be one of the same. But when you bolt an entire layer of seat licensing and what this means for your desktop operating systems on as well as the actual cloud architecture, it gets incredibly confusing incredibly quickly. And architectural advice of the type that I give to AWS customers and would give to GCP customers is absolutely going to be harmful in many respects.

I just don’t know what I don’t know and it’s not an area that interests me, as far as learning that competency, just to jump through hoops. I mean, I frankly used to be a small business Windows admin, with the products that you talked about, back when XP and Server 2003 and a few others, I sort of ruled the roost. But I got so tired of surprise audit-style work. It felt like busy work that wasn’t advancing what I was trying to get done in any meaningful way that, in a fit of rage, one day, I wound up exploring the whole Unix side of the world in 2006 and never went back.

Wes: [whispering] That’s how it happened.

Corey: Yep.

Wes: It’s unfortunate that it’s become so commonplace, but when Vista kind of stalled out and they started exploring other revenue opportunities, you have Vista Ultimate Enterprise, all the crazy SKUing that Vista had, I think it sort of created a mindset within the company that this is what we have to do in order to keep growing revenue up and to the right, and you know, shareholder value be the most important thing, that’s what you’ve got to do. I agree entirely, though, the biggest challenge I could see for someone coming into our space is the fact that yes, you’ve got to understand Azure, Azure architecture, development architecture, and then as soon as you feel like you understand that, somebody comes along and says, “Well, yeah, but because we have an EA, we have to do it this way or we only get a discount on this thing.” And yeah, it just makes things more cumbersome. And I think that’s why we still see a lot of customers who come to our boot camps who are still very dedicated AWS customers because that’s where they were, and it’s easier in many regards, and they just want to go with what they know.

Corey: And I think that that’s probably fair. I think that there is an evolution that grows here that I think catches folks by surprise. I’m fortunate in that my Microsoft involvement, if we set things like GitHub aside because I like them quite a bit and my Azure stuff as well—which is still small enough to fit in the free tier, given that I use it for one very specific, very useful thing—but the rest of it is simply seat licenses for Office 365 for my team. And I just tend to buy the retail-priced one on the internet that’s licensed for business use, and I don’t really think about it again. Because I don’t need, as you say, in-depth audit logs for Microsoft Word. I really don’t. I’m sorry, but I have a hard time believing that that’s true. But something that immediately crops up when you say this is when you talk about E3 versus E5 licensing, is that organization-wide or is that on a per-seat basis?

Wes: It’s even worse than that. It usually comes down to per-user licensing. The whole world used to be per device licensing in Microsoft and it switched to per user when they subscript-ified everything—that’s a word I made up a while ago—so when they subscript-ified everything, they changed it over to per user. And for better or worse, today, you could—there’s actually four different tiers of Microsoft 365. You could go for any one of those four for any distinct user.

You could have one of them on F1, F3, E3, and E5. Now, if you do that, you create some other license non-compliance issues that we spend way too much time having to talk about during the boot camp, but the point is, you can buy to fit; it’s not one-size-fits-all necessarily. But you run into, very rapidly, if you deploy E5 for some number of users because the products that are there, the security services and compliance services ironically don’t do license compliance in most cases, customers can actually wind up creating new license compliance problems, thereby basically having to buy E5 for everybody. So, it’s a bit of a trapdoor that customers are not often aware of when they initially step into dabbling in Microsoft 365 E5.

Corey: When you take a look at this across the entire board, what is your guidance to customers? Because honestly, this feels like it is a full-time job. At scale, a full-time job for a department simply keeping up with all of the various Microsoft licensing requirements, and changes because, as you say, it’s not static. And it just feels like an overwhelming amount of work that to my understanding, virtually no other vendor makes customers jump through. Sure there’s Oracle, but that tends to be either in a database story or a per developer, or on rare occasions, per user when you build internal Java apps. But it’s not as pervasive and as tricky as this unless I’m missing something.

Wes: No, you’re not. You’re not missing anything. It’s very true. It’s interesting to think back over the years at the boot camp. There’s names I’ve heard that I don’t hear anymore in terms of companies that were as bad. But the reality is, you hear the names of the same software companies but, exactly to your point, they’re all departmental. The people who make [Roxio 00:16:26] still, they’re very departmentalized. Oracle, IBM, yeah, we hear about them still, but they are all absolutely very departmentalized.

And Microsoft, I think one of the reason why we do get so many—for better or worse, for them—return visitors to our licensing boot camps that we do every two months, is for that exact reason, that some people have found they like outsourcing that part of at least trying to keep up with what’s going on, what’s the record? And so, they’ll come back every two, three, or four years and get an update. And we try to keep them updated on, you know, how do I color within the lines? Should it be like this? No. But it is this way.

In fact, it’s funny, I think back, it was probably one of the first few boot camps I did with Rob. We were in New York and we had a very large customer who had gotten a personalized message from Microsoft talking about how they were going to simplify licensing. And we went to a cocktail hour afterwards, as we often do on the first day of the boot camp, to help people, you know, with the pain after a boot camp, and this gentleman asks us well, “So, what are you guys going to do once Microsoft simplifies licensing?” And Rob and I just, like, looked at each other, smiled, looked back at the guy, and laughed. We’re like, “We will cross that bridge when we get to it.”

Corey: Yeah, people ask us that question about AWS billing. What if they fix the billing system? Like, we should be so lucky to live that long.

Wes: I have so many things I’d rather be doing. Yes.

Corey: Mm-hm. Exactly. It’s one of those areas where, “Well, what happens in a post-scarcity world?” Like, “I couldn’t tell you. I can’t even imagine what such a thing would look like.”

Wes: Exactly [laugh]. Exactly.

Corey: So, the last time we spoke way back, I think in 2019, Microsoft had wound up doing some unfortunate and fairly underhanded-appearing licensed changes, where it was more expensive to run a bunch of Microsoft things, such as server software, most notably SQL Server, on clouds that were not Azure. And then, because you know, you look up the word chutzpah in the dictionary, you’ll find the Microsoft logo there in response, as part of the definition, they ran an advertising campaign saying that, oh, running many cloud workloads on Azure was five times cheaper than on AWS. As if they cracked some magic secret to cloud economics. Rather than no, we just decided to play dumb games that win worse prizes with cloud licensing. How did that play out?

Wes: Well, so they made those changes in October of 2019, and I kind of wish they’d become a bigger deal. And I wish they’d become a bigger deal earlier so that things could have been, maybe, reversed when it was easier. But you’re absolutely right. So, it—for those who don’t know, it basically made licensing changes on only AWS, GCP, and Alibaba—who I never had anybody ask me about—but those three. It also added them for Azure, but then they created loopholes for themselves to make Azure actually get beneficial licensing, even better than you could get with any other cloud provider [sigh].

So, the net takeaway is that every Microsoft product that matters—so traditionally, SQL Server, Windows Server, Windows client, and Office—is not impossible to use on AWS, but it is markedly more expensive. That’s the first note. To your point, then they did do that marketing campaign that I know you and I probably had exchanges about at the time, and it drove me nuts as well because what they will classically do is when they tout the savings of running something on Azure, not only are they flouting the rules that they created, you know, they’re basically gloating, “Look, we got a toy that they didn’t,” but they’re also often removing costs from the equation. So, for example, in order for you to get those discounts on Azure, you have to maintain what’s called Software Assurance. You basically have to have a subscription by another name.

If you don’t have Software Assurance, those opportunities are not available to you. Fine. That’s not my point. My point is this, that Software Assurance is basically 75% of the cost of the next version. So, it’s not free, but if you look at those 5x claims that they made during that time frame, they actually were hand-waving and waving away the [assay 00:20:45] costs.

So, if you actually sat down and did the math, the 5x number was a lie. It was not just very nice, but it was wrong, literally mathematically wrong. And from a—as my colleague likes to say, a ‘colors person,’ not a numbers person like me, from a colors person like me, that’s pretty bad. If I can see the error and your math, that’s bad math.

Corey: It just feels like it’s one of those taxes on not knowing some of the intricacies of what the heck is going on in the world of Microsoft licensing. And I think every sufficiently complex vendor with, shall we say, non-trivial pricing dimensions, could be accused of the same thing. But it always felt particularly worrisome from the Microsoft perspective. Back in the days of BSA audits—which I don’t know at all if they’re still a thing or not because I got out of that space—every executive that I ever spoke to, in any company lived in fear of them, not because they were pirating software or had decided, “You know what? We have a corporate policy of now acting unethically when it comes to licensing software,” but because of the belief that no matter what they came up with or whatever good faith effort they made to remain compliant, of course, something was not going to work the way they thought it would and they were going to be smacked with a fine. Is that still the case?

Wes: Absolutely. In fact, I think it’s worse now than it ever was before. I will often say to customers that you are wildly uncompliant while also being wildly overcompliant because per your point about how broad and deep Microsoft is, there’s so many products. Like, every company today, every company that has Project and Visio still in place today, that still pays for it, you are over-licensed. You have more of it than you need.

That’s just one example, but on the other side, SQL Server, odds are, every organization is subtly under-licensed because they think the rule is to do this, but the rules are actually more restrictive than they expect. So, and that’s why Microsoft is, you know, the first place they look, the first rug they look under when they do walk in and do an audit, which they’re entitled to do as a part of an organization’s enterprise agreement. So BSA, I think they do still have those audits, but Microsoft now they have their own business that does that, or at least they have partners that do that for them. And places like SQL Server are the first places that they look.

Why? Because it’s big, found money, and because it’s extremely hard to get right. So, there’s a reason why, when we focus on our boot camps, we’ll often tell people, you know, “Our goal is to save you enough money to pay for the class,” because there’s so much money to be found in little mistakes that if you do a big thing wrong with Microsoft software, you could be wildly out of compliance and not know about it until Microsoft-or more likely, a Microsoft partner—points it out to you.

Corey: It feels like it’s an inevitability. And, on some level, it’s the cost of doing business. But man, does that leave a sour taste in someone’s mouth.

Wes: Mm-hm. It absolutely does. It absolutely does. And I think—you know, I remember, gosh, was it Munich that was talking about, “We’re going to switch to Linux,” and then they came back into the fold. I think the reality is, it absolutely does put a bad taste.

And it doesn’t leave customers with good hope for where they go from here. I mean, okay, fine. So, we got burned on that thing in the Microsoft 365 stack. Now, they want us to pay 30 bucks for Copilot for Microsoft 365. What? And we’d have no idea what they’re even buying, so it’s hard to give any kind of guidance. So, it’s a weird time.

Corey: I’m curious to see what the ultimate effect of this is going to be. Well, one thing I’ve noticed over the past decade and change—and I think everyone has as well—increasingly, the local operating system on people’s laptops or desktops—or even phones, to some extent—is not what it once was. Increasingly, most of the tools that I find myself using on a daily basis are just web use or in a browser entirely. And that feels like it’s an ongoing problem for a company like Microsoft when you look at it through the lens of OS. Which at some level, makes perfect sense why they would switch towards everything as a service. But it’s depressing, too.

Wes: Yeah. I think that’s one of the reasons why, particularly after Steve left, they changed focus a lot and really begin focusing on Microsoft 365 as the platform, for better or worse. How do we make Microsoft 365 sticky? How do we make Office 365 sticky? And the thing about, like, the Microsoft 365 E5 security stuff we were talking about, it often doesn’t matter what the user is accessing it through. The user could be accessing it only through a phone, they could be a frontline worker, they could be standing at a sales kiosk all day, they could be using Office every single day, or they could be an exec who’s only got an iPad.

The point is, you’re in for a penny, in for a pound at that point that you’ll still have to license the user. And so, Microsoft will recoup it either way. In some ways, they’ve learned to stop caring as much about, is everyone actively using our technology? And on the other side, with things like Teams, and as we’re seeing very, very slowly, with the long-delayed Outlook here, you know, they’re also trying to switch things to have that less Win32 surface that we’re used to and focus more on the web as well. But I think that’s a pretty fundamental change for Microsoft to try and take broadly and I don’t anticipate, for example, Office will ever be fully replaced with a fat client like it has on Windows and the Mac OS.

Corey: Yeah, part of me wonders what the future that all looks like because increasingly, it feels more than a little silly that I’m spending, like, all of this ever-increasing dollar figure on a per-seat basis every year for all of Microsoft 365. Because we don’t use their email system. We don’t use so much of what they offer. We need basically Word and Excel and once in a blue moon PowerPoint, I guess. But that’s it. Our fundamental needs have not materially shifted since Office 2003. Other than the fact that everything uses different extensions now and there’s, of course, the security story on top of it, too. We just need some fairly basic stuff.

Wes: And I think that’s the case for a lot of—I mean, we’re the exact same way at Directions. And I think that’s the case for a lot of small and even into mid-size companies. Microsoft has traditionally with the, like, Small Business Premium, they have an offering that they intentionally only scale up to 300 people. And sometimes they’ll actually give you perks there that they wouldn’t give away in the enterprise suite, so you arguably get more—if they let you have it, you get more than you would if you’ve got E5. On the other side, they’ve also begun, for enterprises, honing in on opportunities that they may have historically ignored.

And when I was at Microsoft, you’d have an idea, like, “Hey, Bob. I got an idea. Can we try to make a new product?” He’s like, “Okay, is it a billion-dollar business?” And you get waved away if it wasn’t all a billion-dollar business. And I don’t think that’s the case anymore today, particularly if you can make the case, this thing I’m building makes Microsoft 365 sticky or makes Azure sticky. So, things like the Power Platform, which is subtly and slowly replacing Access at a minimum, but a lot of other tools.

Power BI, which has come from behind. You know, people would look at it and say, “Oh, it’s no Excel.” And now it, I think, far exceeds Excel for that type of user. And Copilot, as I talked about, you know, Microsoft is definitely trying to throw things in that are beyond Office, beyond what we think of as Microsoft. And why are they doing that? Because they’re trying to make their platform more sticky. They’re trying to put enough value in there so you need to subscribe for every user in your organization.

And even things, as we call them, ‘Batteries not Included’ like Copilot, that you’re going to buy E5 and that you’re still going to have to buy something else beyond that for some number of users. So, you may even have a picture in your head of how much it’s going to cost, but it’s like buying a BMW 5 Series; it’s going to cost more than you think.

Corey: I wish that there were a better path forward on this. Honestly, I wish that they would stop playing these games, let you know Azure compete head-to-head against AWS and let it win on some of its merits. To be clear, there are several that are great. You know, if they could get out of their own way from a security perspective, lately. But there seems to be a little appetite for that. Increasingly, it seems like even customers asking them questions tends to hit a wall until, you know, a sitting US senator screams at them on Twitter.

Wes: Mm-hm. No, and then if you look carefully at—Microsoft is very good at pulling just enough off of the sweater without destroying the sweater. And for example, what they did, they gave enough away to potentially appease, but they didn’t actually resolve the problem. They didn’t say, “All right, everybody gets logging if they have Microsoft 365 E3,” or, “Everybody gets logging, period.” They basically said, “Here’s the kind of logging you can get, and we’re going to probably tweak it a little bit more in the future,” and they will not tweak it more in the future. If anything, they’ll tighten it back up.

This is very similar to the 2019 problem we talked about earlier, too, that you know, they began with one set of rules and they’ve had to revisit it a couple of times. And most of the time, when they’ve had an outcry, primarily from the EU, from smaller cloud providers in the EU who felt—justifiably—that Microsoft was being not—uncompetitive with Azure vis-à-vis every other cloud provider. Well, Microsoft turned around and last year changed the rules such that most of these smaller cloud providers get rules that are, ehh, similar to what Azure can provide. There are still exclusives that only Azure gets. So, what you have now is basically, if you’re a customer, the best set and cheapest set is with Azure, then these smaller cloud providers give you a secondary—it’s close to Azure, but still not quite as good. Then AWS, GCP, and Alibaba.

So, the rules have been switched such that you have to know who you’re going to in order to even know what the rules are and to know whether you can comply with those rules with the thing you want to build. And I find it most peculiar that, I believe it was the first of last month that Microsoft made the change that said, “You’ll be able to run Office on AWS,” which was Amazon WorkSpaces, in particular. Which I think is huge and it’s very important and I’m glad they made this change, but it’s weird because it creates almost a fifth category because you can’t run it anywhere else in Amazon, like if you were spinning something up in VMware on Amazon, but within Amazon WorkSpaces, you can. This is great because customers now can run Office for a fee. And it’s a fee that’s more than you’d pay if you were running the same thing on Microsoft’s cloud.

But it also was weird because let’s say Google had something competitive in VDI, but they don’t really, but if they had something competitive in VDI, now this is the benefit that Amazon has that’s not quite as good as what Microsoft has, that Google doesn’t get it at all. So, it’s just weird. And it’s all an attempt to hold… to both hold a market strategy and an attempt to grow market share where they’re still behind. They are markedly behind in several areas. And I think the reality is, Amazon WorkSpaces is a really fine offering and a lot of customers use it.

And we had a customer at our last in-person boot camp in Atlanta, and I was really impressed—she had been to one boot camp before, but I was really impressed at how much work she’d put into making sure we know, “We want to keep using Amazon WorkSpaces. We’re very happy with it. We don’t want to move anywhere else. Am I correct in understanding that this, this, this, and this? If we do these things will be aboveboard?” And so, she knew how much more she’d have to pay to stay on Amazon WorkSpaces, but it was that important to the company that they’d already bet the farm on the technology, and they didn’t want to shift to somebody else that they didn’t know.

Corey: I’m wondering how many people have installed Office just through a standard Microsoft 365 subscription on a one-off Amazon WorkSpace, just because they had no idea that that was against license terms. I recall spinning up an Amazon WorkSpace back when they first launched, or when they wound up then expanding to Amazon Linux; I forget the exact timeline on this. I have no idea if I did something like that or not. Because it seems like it’d be a logical thing. “Oh, I want to travel with just an iPad. Let me go ahead and run a full desktop somewhere in the cloud. Awesome.”

That feels like exactly the sort of thing an audit comes in and then people are on the hook for massive fines as a result. It just feels weird, as opposed to, there are a number of ways to detect you’re running on a virtual machine that isn’t approved for this. Stop the install. But of course, that doesn’t happen, does it?

Wes: No. When we teach at the boot camp, Rob will often point out that, you know, licensing is one of the—and it’s true—licensing is one of the last things that comes in when Microsoft is releasing a product. It was that way when he was at the company before I was—he shipped Word 1.0 for the Mac, to give you an idea of his epoch—and I was there for XP, like I said, which was the first version that used activation—which was a nightmare—there was a whole dedicated team on. And that team was running down to the wire to get everything installed.

And that is still the case today because marketing and legal make decisions about how a product gets sold. Licensing is usually tacked on at the very end if it gets tacked on at all. And in fact, in a lot of the security, compliance, and identity space within Microsoft 365, there is no license compliance. Microsoft will show you a document that, “Hey, we do this,” but it’s very performative. You can’t actually rely on it, and if you do rely on it, you’ll get in trouble during an audit because you’ve got non-compliance problems. So yeah, it’s—you would hope that it keeps you from coloring outside the lines, but it very much does not.

Corey: It’s just a tax on going about your business, in some ways [sigh].

Wes: Exactly. “Don’t worry, we’ll be back to fix it for you later.”

Corey: [laugh]. I really appreciate your taking the time to go through this with me. If people want to learn more, where’s the best place for them to keep up with what you’re up to?

Wes: Well, obviously, I’m on Twitter, and—oh, sorry, X, whatever.

Corey: No, we’re calling it Twitter.

Wes: Okay, I’m on—I’m on—[laugh] thank you. I’m on Twitter at @getwired. Same alias over on [BlueSky 00:35:27]. And they can also find me on LinkedIn, if they’re looking for a professional question beyond that and want to send a quiet message.

The other thing is, of course, go to directionsonmicrosoft.com. And directionsonmicrosoft.com/training if they’re interested in one of our licensing boot camps. And like I said, Rob, and I do those every other month. We’re increasingly doing them in person. We got one in Bellevue coming up in just a few weeks. So, there’s opportunities to learn more.

Corey: Excellent. And we will, of course, put links to that in the [show notes 00:35:59]. Thank you so much for taking the time to chat with me again, Wes. It’s appreciated.

Wes: Thank you for having me.

Corey: Wes Miller, Research VP at Directions on Microsoft. I’m Cloud Economist Corey Quinn, and this is Screaming in the Cloud. If you’ve enjoyed this podcast, please leave a five-star review on your podcast platform of choice, whereas if you’ve hated this podcast, please leave a five-star review on your podcast platform of choice, along with an angry, insulting comment that will no doubt be taken down because you did not sign up for that podcasting platform’s proper license level.

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