Windows Azure and Windows Server - Licensing Model

Press and blog coverage over the last few weeks spurred several folks to ask questions about our licensing model for cloud technology - specifically Windows Azure.

I posted a blog last week which covered a variety of topics related to Azure (Microsoft’s Cloud Services Platform). It’s clear from the feedback that it addressed a variety of issues but spawned some additional questions. These are really important topics and something I’d like to share broadly rather than answer in email. The most popular follow up question was “Are you going to license Windows Azure to 3rd parties for them to run on their own?” While the answer to the question in pure terms is no, the approach regarding innovation is the more interesting question to answer. Why? Many of the innovations we make in Windows Azure will become available through Windows Server and System Center.

First, a little background… As I have indicated previously, Windows Azure is an extension to the Windows Server code base. We are building a ton of new IP, which takes advantage of the Windows Server and System Center codebases, and provides a cloud compute fabric as well as an extensive set of management technologies that help us run the service. This is an instantiation of our Software + Services vision as we evolve technology to meet the needs of customers across cloud and on premises.

Windows Azure innovations are being shared with the Windows Server code base. Down the road, many features that drive our cloud fabric in Windows Azure will land in our premises technology, including Windows Server and System Center. You could imagine that at some point a “cloud” and an enterprise data center will share a lot of the same attributes in terms of the functionality it delivers and the way it runs. There will be places where Windows Azure features will make good sense for customers across multiple segments, and we want to make sure that functionality is offered to them as broadly as possible for their on-premises solutions.

We don’t envision something on our price list called “Windows Azure” that is sold for on-premises deployment. Some implementation details aren’t going to be practical for customers, such as our global data-center hardware design and large scale multi-tenancy features which are integral to Windows Azure and the Azure Services Platform. Why? We will continue to evolve Windows Server and System Center focusing significantly on technologies like virtualization, app and web server capabilities, single-pane management tools for managing on-premise and cloud in the same way, etc. which extend the enterprise data center in significant ways. We’ll continue to license Windows Server and System Center (and therefore the shared innovation derived from Windows Azure) to hosters through our SPLA program.

Here are some scenarios which may further clarify:


Our approach

What you consume

You’re an enterprise who wants to get more capacity and flexibility from your datacenter.

We are working night and day to expand the virtualization and management capabilities in Windows Server and System Center to meet this need.

Windows Server

System Center Virtual Machine Manager

You’re an ISV who wants to build an application in the cloud to get geo-scale without geo-cost.

We are working hard to make Windows Azure and the broader Azure Services Platform the most compelling option to host and scale this application.

Windows Azure – via consumptive business model (cloud hosting)

You’re a mid-size business and want to consolidate your server environment and outsource some pieces.

We offer Exchange Online and more for hosted email both directly as well as through partners. We continue to build on core app server and web server capabilities in Windows Server to help customers stretch their capacity.

Exchange Online Windows Server

Windows Server Hosting Partners who offer Windows Server as a service

You’re a small business with no IT experience and prefer not to manage a local server for your application that drives your business.

This customer would license an application experience (SaaS) through an ISV or CRM provider that runs on Windows Azure or Windows Server Hosting partners.


Windows Azure – via consumptive business model (cloud hosting).

Windows Server Hosting Partners

You’re a hoster / IT Outsourcer and want to increase your hardware utilization through Virtualization.

Virtualization will continue to be a key area of focus for the next version of Windows Server. Future versions of Windows Server (licensed directly and through SPLA) and System Center will reflect innovations from Windows Azure.

Windows Server

System Center


So, to net this out… While Windows Azure isn’t something we will license for premises deployment, we will license many of the innovations via future versions of Windows Server and System Center. As always, your comments, questions, thoughts, suggestions are much appreciated.

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