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Organizations Face Few Options to Windows 10 Enterprise Licensing

Organizations looking at their client operating system futures may find that they'll have little choice except to buy Windows 10 Enterprise edition licensing.

At least that's the view of analyst and consulting firm Directions on Microsoft, which has been tracking Microsoft licensing and technology since 1992. In essence, Microsoft's recent changes in Windows support, licensing rules and product interdependencies are making Windows 10 Enterprise a likelihood for most organizations, according to a Thursday Web presentation by Rob Horwitz, CEO and research chair at Directions on Microsoft.

Horwitz, like many of the analysts at Directions on Microsoft, is a former Microsoft employee. He served in development and technical marketing roles at Microsoft from 1984 to 1992. However, the Kirkland, Wash.-based consultancy declares that it has no ties to Microsoft and deems itself to be an independent agency.

Sometimes analysts come out with unpleasant advice. IT pros may recall the days of running the Professional editions of Windows in organizations, and there still seems to be choice in using different editions of Windows 10. However, Horwitz offered some reasons why the alternatives to Windows 10 Enterprise licensing may be illusory, especially considering the near-term planning that organizations typically tend to do.

Narrowed Options
There are two reasons why organizations may be compelled to go with Windows 10 Enterprise, according to Horwitz. First, an organization may use Windows in a way that requires Software Assurance (SA) coverage.

It might be thought that organizations typically buy SA to be assured of getting the next software update within the SA term period. They also get some educational perks with SA. That was the original SA concept. However, Microsoft also requires SA for many of its software use rights cases. For instance, SA is required on Windows 10 Enterprise edition licenses via the Microsoft volume licensing program (five or more licenses), although it still is possible to use Windows 10 Pro under volume licensing.

The second reason why organizations may have to go with Windows 10 Enterprise is that they are dependent on using Windows and they have no other viable client OS alternative. If an organization hasn't already been using Linux-based clients, for instance, it could be costly to switch from Windows.

Horwitz offered the grim observation that organizations stuck on Windows clients likely will have to follow the semiannual channel (SAC) servicing model of Windows 10, in which OS updates arrive faster, with major updates arriving twice per year. "Windows 10 Enterprise via SAC is inevitable," he said, and later explained that "SAC for general-purpose PCs is only supported for Office 365 ProPlus going forward." He also quipped that SAC might better be known by the phrase, "Software Assurance Compulsory."  

Microsoft does offer a long-term servicing channel (LTSC) update model for Windows 10, which is almost identical to its old Windows 7 update approach, but it's only deemed viable by Microsoft for unique scenarios, such as medical devices that can't tolerate frequent updates. LTSC is not intended for use with general-purpose PCs.

Mandatory Software Assurance Scenarios
One use-case scenario that requires SA is the use of virtual desktop infrastructure (VDI) for remote access, where the virtual machine can be running the Windows 10 Pro or Enterprise editions. However, the client that remotely connects to the virtual machine has to be licensed for Windows 10 Enterprise under Microsoft's use rules, Horwitz explained. "All clients accessing VDI require Enterprise licensing, period," he said.

Another scenario requiring SA is the use of Microsoft Desktop Optimization Pack (MDOP) technologies. MDOP includes solutions such as App-V for application virtualization and UE-V ("User Experience Virtualization") for maintaining an end user's desktop experience across devices.

Alternatives to Windows 10 Enterprise
Horwitz proposed some Windows 10 Enterprise alternatives, but he didn't offer much hope for them in the near term.

Possibly, an organization may use Windows in a way that does not require SA. Organizations could try sticking with Windows 7 or Windows 8.1, but those OSes will fall out of support in the near future. Windows 7 will lose support beyond the end of 2019, which means no security patches will arrive, and it's also getting harder to buy new Windows 7 PCs. Windows 8.1 will lose support in 2023, but Microsoft's level of support for that OS is "tepid," Horwitz said. He also noted that the Office 365 ProPlus productivity suite will not be supported on Window 8.1 beyond 2019.

Organizations using Windows 10 on the LTSC update model and using Office 365 ProPlus also will find that Microsoft's Office 365-based productivity suite will not be supported beyond 2019. It'll just be supported in the near future under the SAC update model.

Organizations with Enterprise Agreements (EAs) could try to shave costs by dumping SA at some point, but Horwitz noted limitations to that approach. In the Q&A session of the talk, he explained that when an organization buys Windows 10 Enterprise edition licensing under an EA, after three years, it owns a "perpetual" Windows 10 license. However, Microsoft makes it difficult to exploit that perpetual license. For instance, when SA gets dropped on a Windows 10 Enterprise license, OS reassignment rights go away, so the license is stuck on that machine. In addition, perpetual licenses become "pretty much useless" under the Windows 10 servicing model. Organizations can only deploy the OS if they keep SA active.

"To summarize, yes, you own gold, but that gold is sitting thousands of miles below the sea," Horwitz said regarding dropping SA on Windows 10 in an EA.

Organizations could try going with the Windows 10 Professional edition. Horwitz commented that if an organization goes that way, then it won't get access to some of Microsoft's more advanced security enhancements that are emerging. They could try to get similar security enhancements from "third-party" software vendors, but Microsoft may not make it easy for those vendors to replicate the capabilities. Another consideration is that Microsoft has already moved features that once were in the Windows 10 Pro edition to the Enterprise edition. Horwitz provided the following list of features that Microsoft formerly had included in Windows 10 Pro:

  • Ability to disable the Windows Store via Group Policy
  • Ability to use App-V and UE-V
  • Ability to use Group Policy to enforce a specific lock screen image
  • Ability to create Resilient File System (ReFS) disks

The last option for organizations is to dump all Windows clients, and perhaps use Linux. Horwitz contended that it's not technically practical for most organizations to do that. It would entail the pain of mass client and app migrations.

Buying Windows 10 Licensing
Horwitz spent some time explaining what buying Windows 10 licensing entails for organizations. The licensing has "per-user" and "per-device options." With per-device licensing, each physical device is assigned a license, and anyone can use that device. With per-user licensing, each person is assigned a license, and these people can use any device. It's possible to mix the per-device and per-user options, although it can be problematic keeping track of them. Horwitz commented that neither license has a mandatory built-in enforcement mechanism, but the per-user option may be heading in that direction.

Organizations that have existing Windows client licensing can get a 20 percent to 30 percent price break when buying Windows 10. It's applicable if they have Windows 7 Pro or better and per-device licensing. It's also applicable under per-user licensing for those editions if it's for a primary work device. An existing Microsoft Virtual Desktop Access license has no preconditions for getting a price discount, but it's also a more expensive license and it is essentially the exact same thing as an Enterprise edition license, Horwitz explained.

Organizations have eight options for buying Windows 10 Enterprise licensing. Microsoft Enterprise licensing is akin to a coin toss, where there are three different coins, but each coin could be heads or tails (2 x 2 x 2 = 8), Horwitz explained. One coin has per-device and per-user sides. Windows 10 Enterprise and VDA also can be considered to be two sides of the same coin. The Windows Enterprise E3 plan, which adds no extra layer of security protection, and the E5 plan, which does have those protections, can also be considered two sides of a coin when making licensing purchase decisions. The E5 plan gives organizations access to security services such as Windows Defender Advanced Threat Protection.

Windows licensing is just flat-out confusing. Directions on Microsoft publishes timelines on Microsoft's licensing changes, and, while it's a summary, it still takes 6,000 words to describe the changes made over the last five years, Horwitz said.

In addition to talks, Directions on Microsoft gives advice to its members and publishes roadmaps and reports that track Microsoft's licensing and technologies. It also conducts regular "Bootcamp" seminars on Microsoft licensing and agreements. This public talk, "Windows 10 Enterprise Licensing," was recorded. It's expected to available to members the week of Feb. 26.

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