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Has Microsoft taken steps which limit supply to the European 2nd user licensing market?

by Stephen White  |  June 11, 2020  |  Comments Off on Has Microsoft taken steps which limit supply to the European 2nd user licensing market?

FromSA licensing rewards Microsoft clients who’ve previously maintained annuity coverage. European organizations should assess a new requirement to access those benefits.

In 2012 The Court of Justice of the European Union issued a ruling which has given rise to an option for organization to sell software licenses that were no longer covering software being deployed and utilized.

This option arguably became more addressable as European organizations migrated to SaaS applications and perpetual licenses had become redundant. Whilst in my analyst role I don’t cover on-selling licenses, or the brokers within this market, I noticed the following recently appeared as a requirement in Microsoft Product Terms specific to ‘From SA’ eligibility.

Customer retains the corresponding Qualifying Licenses throughout its From SA license subscription period

As a result of this clause being included, it now appears the benefit of an organization on-selling what would have been considered redundant perpetual licenses, having moved to the cloud may be limited or offset. Such an action to on-sell, thus no longer retaining qualifying licenses, will appear to come at the cost of potentially accessing a ‘FromSA’ beneficial price point – a circa 15% price delta – and any associated extended use rights.

Gartner is not a legal firm and does not provide any legal advice. European organizations signing new Microsoft agreements with an intent to on-sell their legacy perpetual licenses should take note and consult appropriate legal counsel to interpret this clause and the European regional rulings.

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Category: cloud  licensing  

Stephen White
Research Director
4 years at Gartner
16 years IT Industry

Stephen White is a Research Director in Gartner's IT Asset Management, Vendor Management and Procurement team, focusing on strategic licensing and negotiation strategies, asset management, and reseller engagement. Mr. White leverages his experience in software sales and consulting to assist IT leaders through his coverage of best practices in license life cycle strategy and trends, license metric and pricing practices, contract negotiations, optimizing terms and conditions, sourcing, and relationship management. Read Full Bio

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