Update March 30, 2023: We’re excited to announce upcoming enhancements with new offers and program changes that reduce cost and benefit our customers and partners in the CSP-Hoster program. These enhancements will roll out throughout calendar year 2023. Please review the Partner Center announcement for specifics here.
Microsoft believes in the value of the partner ecosystem, and in response to partner feedback, on October 1, 2022, Microsoft will implement major revisions and upgrades to its outsourcing and hosting terms that will benefit partners and customers globally. With these changes, it is exciting to see the potential customer benefits that will enable new scenarios for how they can license and run workloads with infrastructure outsourcers. Additionally, I am happy to share that the Cloud Solution Provider (CSP) program will have a new program option that enables participating partners to more effectively sell hosted solutions to customers, either with licenses included or to customers that are already licensed.
These changes have three primary goals:
- Make it easier for customers to bring their software to the partner’s cloud: Expanded use rights allow customers to run their software, including Windows 11, on hosters’ multitenant servers and more easily license virtual machines for Windows Server.
- Ensure partners have access to the products necessary to sell cost-effective solutions that customers want: Create more opportunities for partners to work with more customers, to sell the solutions they need, and to run them where they prefer.
- Empower partners to build hosted solutions with speed and scale: Enable partners to build hosted desktop and server solutions to help directly fulfill customers’ hosting needs.
Why are we making these changes? These program updates are based on partner feedback, and we’re grateful for the requests and recommendations we’ve received from our partners.
Partners have asked Microsoft to simplify licensing and to expand the range of products that can be offered to customers at fixed pricing for longer terms, and we’ve responded. We also want to provide more opportunities for customers to be able to have Microsoft software hosted on partners’ infrastructure. These details today follow our May 18 announcement of a new initiative to support European Cloud Providers, where we affirmed our commitment to making these changes to Microsoft’s licensing terms and partner program. These changes will be applicable worldwide.
Here’s what hosters and customers can expect at launch on October 1:
More flexibility and options for software outsourcing: Microsoft will introduce a new Flexible Virtualization benefit for customers that will greatly expand customer choice when outsourcing. Under this benefit, customers with Software Assurance or subscription licenses will be able to use their own licensed software to build and/or install solutions and run them on any outsourcers’ infrastructure (except Listed Providers’*) — dedicated or shared. This gives partners that offer infrastructure outsourcing the opportunity to host the customer solutions on more flexible hardware configurations, and enables hosting partners that sell license-included hosting (such as Windows Server under Services Provider Licensing Agreements, or SPLA) to allow their customers to install customer-licensed products, like SQL Server, Microsoft 365 Apps, and more, on their hosted solutions.
Introducing new Windows Server virtual core licensing: Included as part of the Flexible Virtualization benefit, we also want to offer Windows Server in a license model that is compatible with shared server outsourcing. To that effect, we will introduce an option to license Windows Server on a virtual core basis. Today, Windows Server is licensed by physical core, which means customers must have access to the physical server hardware to ensure that they have enough Windows Server licenses to cover all physical cores in the machine. With the virtual core licensing option, customers can elect to license Windows Server by the number of virtual cores they are using in virtual machines, making Windows Server easier to license when virtualizing or outsourcing. This change will help cloud providers appeal to customers with legacy Windows Server workloads by enabling them to move these workloads from on-premises servers to the cloud.
Simplifying how customers can virtualize Windows 10 or Windows 11 with Microsoft 365: Any user with a Microsoft 365 F3, Microsoft 365 E3, or Microsoft 365 E5 license will be able to virtualize Windows 10 or Windows 11 on their own servers or on outsourcers’ servers (except Listed Providers), regardless of whether the user’s primary device has a Qualifying Operating System (QOS)** — e.g., Windows 11 Pro — and without the need for any additional licenses. Today, Microsoft 365 users without a primary device with a QOS must also acquire a VDA add-on license to virtualize Windows 10 or Windows 11. After October 1, 2022, we are eliminating that requirement for Microsoft 365 F3, Microsoft 365 E3, and Microsoft 365 E5 users, simplifying our licensing rules, and giving customers more choice and flexibility to virtualize Windows 10 or Windows 11.
Enabling sales of longer-term hosted solutions: During our discussions with cloud providers, we also heard a clear request for Microsoft to enable them to sell solutions with longer term price stability for a customer. To address that ask, Microsoft will enhance the Cloud Solution Provider (CSP) program so that partners can sell customers either one- or three-year subscriptions for many products including Windows Server, Remote Desktop Services (RDS), and SQL Server. We are also adding more monthly billing options in the CSP program for many of our one-year offers.
Empowering partners to build hosted solutions with new hosting program: “Cloud Solution Provider — Hoster” (CSP-Hoster) is a new program that will enable participating CSP partners to pre-build hosted desktop and server solutions that they can sell to customers along with licenses in CSP (license-included hosting), or to customers that already have licenses (customer BYOL-to-partner solutions). A Microsoft Customer Agreement with the CSP-Hoster and proof of license (for BYOL-to-partner solutions) will be required from the customer. Partners in this program will not need to acquire distinct media and keys from each end customer to deploy their solution. Instead, partners will be able to access a catalog of Microsoft software that they can use to pre-build solutions that are ready for customer use. CSP-Hoster is an expanded hosting program that replaces the Qualified Multitenant Hosting (QMTH) program. At launch, this program will be limited to QMTH eligible CSP Direct Bill partners with an active SPLA only, but we look forward to expanding program eligibility over time.
SPLA program update regarding outsourcing
At its inception, SPLA was intended to allow partners to offer hosted services from their own datacenters, not for managed service providers buying through SPLA to host on others’ datacenters. We are making changes to the SPLA program, starting in October 2022, to better align with the program’s intent, and with other commercial licensing programs. To strengthen the hoster ecosystem by focusing the program on breadth hosters and encourage traditional outsourcers and datacenter providers, we are changing the SPLA terms to remove the ability to outsource SPLA licenses on Listed Provider datacenters. Traditional outsourcers and datacenter providers will benefit from this change, and it will help foster the hosting partner ecosystem. Any SPLA partner impacted by this change has until September 30, 2025 to transition from a Listed Provider for SPLA outsourced hosting or to license directly from the Listed Provider outside of their SPLA.
We are excited to provide additional flexibility and increased benefits for partners through our licensing programs. In addition, we welcome ongoing feedback from cloud providers, customers, and other stakeholders as these changes are implemented. Thank you for being an important part of our joint success.
*Listed Providers include Alibaba, Amazon Web Services, Google, and Microsoft, and any outsourcer using a Listed Provider as part of the applicable outsourcing service. Customers that want to use a Listed Provider for outsourcing can acquire licenses directly from the Listed Provider.
**Users still must have a primary device with a Qualifying Operating System to run Windows 10/Windows 11 Enterprise locally on their PCs.