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Windows Server and System Center 2016: A Change in Licensing

Thought-Leadership by Cameron Barth
on December 10, 2015

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Microsoft’s recent announcement around the release of Windows Server 2016 has many people wondering what the cost impact of the licensing model changes will have on their organization.

For many there will be little impact, but organizations with large servers could see price increases of greater than 60%.

What are the main facts?

  • The Windows Server and System Center license model will change from processors to physical cores.

    • This change to physical cores aligns private and public cloud licensing to a consistent currency of cores. This will simplify licensing of hybrid environments.

  • The core based licensing model will become effective when the products are released in FY16_Q3.

  • Licenses for servers with 8 cores or less per processor will be the same price as the 2012 R2 two-processor license price.

  • Customers with processor licenses with Software Assurance (SA) can upgrade to the 2016 version. 

    • At the end of the SA term, the 2 processor licenses will be exchanged for a minimum of 16 core licenses. Customers can renew their SA on the core licenses.

How does this “proc-to-core” change in licensing work?

With the new release of Windows Server 2016, Microsoft has established an 8 core per physical processor license requirement. To keep the prices the same, they have set the new price (per two-core pack) for each edition to 1/8th the price of a two proc license for the corresponding 2012 R2 editions. The net result is maintaining a consistent price whilst simplifying the licensing of hybrid environments. Simply put, the cost to license a 2 processor 16 core server will be approximately the same price between 2012 R2 and 2016.

The real impact – 16+ core processors

At first glance this seems to simply be an expected change to unify the licensing models across various public and private cloud datacenters. And for the most part, this is true.

However, whilst the minimum license requirements will cover most servers in most environments, the licensing changes will have a big impact on the cost of running more powerful machines. Organizations with larger servers will begin seeing a price increase of approximately 20%-60% as their total “proc-to-core” ratio increases beyond 2 procs to 16 cores. The exact percentage increase to total core count has been outlined below.

WSSC_2016_Percentage_Price_Increase_Graph.png

*Price modeling compares machines with a maximum of 2 procs. Machines with more than 2 procs could see an even greater price increase.

*Prices are RRP from the Open Business Australian price list and total price increase could vary depending on the customer and agreement.

Many organizations won’t be impacted by these changes until they purchase licenses on the new model or renew their existing agreements. Organizations that aren’t immediately impacted should take these changes into consideration when evaluating hardware upgrades, as purchasing servers with large proc-to-core ratios could dramatically increase total licensing costs.

In a nutshell, the licensing changes for Windows Server and System Center have two consequences:

  1. Licensing models across both public and private clouds will now share the same physical core currency.

  2. Customers can no longer take advantage of 16+ core processors to achieve licensing savings.

These changes are fairly expected and follow the pattern set from the SQL 2012 licensing model change. Nonetheless, many organizations may still be caught with hardware they have already invested in, and often these hardware decisions can be made without licensing in mind. The take home message from these changes is to stress the importance of aligning your technology strategy with your licensing procurement and management.

If you’d like some help understanding how the changes to Windows Server and System Center affects your organization, then click the banner below and complete the following form for a SoftwareONE Microsoft Licensing Specialist to reach out to you today!

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Related blog post:

Topics: Database and Datacenter

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