Early reports of unconfirmed Microsoft Client Access Licenses (CAL) price increases have abounded in the past half of a year. And, while we’ve all known they were coming, the details are often what is most important. Without further preamble, here are those details:

-Pricing on the User CAL increases by 13% over existing prices

-The increase takes effect on August 1st

-Prices will be released on July 1st (Microsoft always releases official pricing in the month prior to the effective date)

Though these differences seem small, large quantities can make small changes become significant. Customers with current Enterprise Agreements are not immediately impacted by any price increases, but I encourage you to look into the changes all the same. The best strategy with these mid-term changes is to evaluate the impact to your contract immediately as they happen, rather than waiting until the end of your three-year contract. That way, you won’t be overwhelmed by multiple changes.

Why is Microsoft making these changes? As people are using more devices, there is more perceived value in a CAL that covers unlimited devices per user. It is interesting to note that there is no corresponding price change in the cloud offerings that also include on-premises rights to many of the same products. For example, while there will be a User CAL price increase for Exchange, SharePoint and Skype for Business CALs, the E1 and E3 pricing looks to remain flat.

For the past few years, Microsoft has been adjusting pricing strategy to make cloud more appealing. While the cynic might say that increasing pricing on traditional licensing isn’t adding value, I beg to differ. The Office 365 and Azure product lines have expanded to include many additional features and benefits (Office 365 Video, unlimited archiving, dual-use rights, etc.), and pricing for those products has grown at a lower rate than traditional licensing. And, let’s be honest, these price increases started long before Office 365 was ever conceived.

Before I start to sound like a price-increase apologist, let me point out that this is no small matter. It’s important to discuss these changes with a partner you trust, like your CDW licensing specialists. If they haven’t reached out already to discuss the ramifications of these changes, contact your account manager to engage a specialist.

If you want to learn more, see complete details below:

Microsoft will increase on-premises User CAL pricing by approximately 13 percent effective on August 1, 2015. Customers will continue to have the option to license CAL Suites with the choice of per user or per device. The list price for Device CALs will not change. Similarly, customers that purchase the Enterprise Cloud Suite or Office 365 suites will not be affected by the User CAL price increase, as per user licensing is already incorporated into the cost of these offerings.

The following User CALs will be affected:

  • Core CAL Suite
  • Enterprise CAL Suite
  • Exchange Server Standard & Enterprise CALs
  • Lync Server Standard, Enterprise, & Plus CALs
  • Project Server CAL
  • SharePoint Standard & Enterprise CAL
  • System Center Configuration Manager
  • System Center Endpoint Protection
  • System Center Client Management Suite
  • Visual Studio Team Foundation Server CAL
  • Windows Server CAL
  • Windows RDS & RMS CAL
  • Windows Multipoint CAL

As a reminder, Device CALs will not be impacted by this price change, nor will CALs for any product not listed above (SQL, Dynamics AX/CRM, etc.).

What is the Rationale Behind This Change?

Microsoft is committed to sharing pricing and licensing updates to customers and partners to ensure they are prepared and able to evaluate their options. Current market conditions, increased product value, new customer deployment scenarios, and other factors are evaluated when determining pricing for products and services. Customers that purchase the Enterprise Cloud Suite or Office 365 suites will not be affected by the User CAL price increase, as per-user licensing is already incorporated into the cost of the suite. Customers are free to continue to choose between per-user and per-device licensing, and those purchasing CALs on a per-device basis will also not see any price increase.

Following the device growth trends we are seeing, and the ways in which Microsoft is making users more productive on tablets and phones, the value of per user licensing is increasing for our on-premises customers. Today, more than half of information workers use three or more devices for work.[1] In response to this growing trend, Microsoft is investing heavily in multi-device, cross-platform productivity scenarios that are tied to the on-premises servers licensed with CAL Suites.

Key examples of how per user licensing adds new value for customers include:

More Devices = More Value

  • Availability of OWA, Outlook, and Lync apps on iPhone, iPad, and Android devices: These product investments provide information workers with a richer email and meeting experience on mobile devices, enabling more remote-worker collaboration scenarios and improving overall productivity for those working offsite.
  • Gallery view, lobby control, and promote/demote participants functionality added to Lync for iPad: These features bring more parity between the desktop and tablet meetings experience by enabling for iPad the viewing of up to four live video streams, the ability to admit or deny people sitting in the virtual lobby, and the promotion of meeting participants from attendee to presenter status.
  • Media resiliency, conversation history, and OS X Yosemite support added to Lync for Mac: With this update, Lync for Mac will now automatically rejoin a meeting or reconnect a peer-to-peer call if a network disconnect occurs, and will maintain the media connection for peer-to-peer calls if connectivity is lost to Lync Server or Lync Online. This lets voice calls continue even when presence information is no longer available. In addition, this update provides the option to store conversation history in Exchange, as well as locally, and a new Conversation History tab in the Lync for Mac client.
  • Forthcoming OpenGL 4.4 & OpenCL 1.1 API support for RDS: This enables certain engineering and design applications that require these APIs to run on the RDS platform. For example, an advertising firm will be able to provide its designers with virtual desktops running applications like Adobe Photoshop and Autodesk Maya.
  • Easier compliance with licensing requirements by counting users instead of devices in an increasingly BYOD world.

More Ways to Use Those Devices

  • On-premises AD federation improvements to facilitate single sign-on to both server and cloud apps:

These improvements enable a more seamless access and authentication experience across end-user devices. For example, an information worker who needs to access a document on the corporate SharePoint portal while she’s travelling for work can register her device using Workplace Join and gain seamless access to the file.

  • Continued enhancements to Office for iPhone, iPad, and Android phones, and launch of Office for Android tablets: These enhancements increase productivity for those interacting with SharePoint files on non-Windows devices by strengthening feature parity between Office on a desktop PC and Office on mobile devices.*
*Editing with OrgID requires a qualifying Office 365 subscription.

Previously It Was Communicated as a 15 Percent Increase. How Did You Arrive at 13 Percent?

The price differentiation between User CALs and Device CALs is transitioning from +15 percent to +30 percent. This translates to an approximate 13 percent increase on existing User CAL prices.

The +30 percent differential includes the +15 percent differential between Device CALs and User CALs that is already in market, plus the ~13 percent increase effective August 1.

Here’s the math:

Current User CAL price = Device CAL price x 1.15 (15 percent differential)

1.15 x 1.13 (13 percent new increase) = ~1.30 (30 percent differential)

Any questions? Feel free to leave a comment below. Also, be sure to check out our collection of Microsoft-related white papers, articles, case studies and infographics for more information.