We’re proud to be working in conjunction with Microsoft to deliver monthly webinars on licensing. The 60-minute calls run on the second Wednesday of every month and will take you through a different topic each month kicking off with Azure in the Open Volume Licensing programme in August. The calls also include updates on products, technologies and promotions and each month’s call is also recorded so you can catch up with previous topics.
There are three calls on the day, each targeted to a specific audience segment:
10am – 11am Microsoft small and medium business (SMB) partners and distributors
12pm – 1pm Microsoft customers with volume licensing agreements
2pm – 3pm Microsoft Large Solution Providers (LSPs)
Registrations are monitored so please do not register for calls outside your segment or try to register with generic email addresses such as @gmail or @hotmail.
If you are an LSP, please contact your Microsoft account manager to register.
If you are an SMB partner primarily transacting Open and Open Value licence agreements, please contact your preferred distributor who can provide details of the registration links.
If you are a Microsoft Volume licensing customer, you have access to a great new UK specific volume licensing site. The site is a hub through which you can access UK specific VL content and resources. To view details on the Spotlight Calls as well as our upcoming 2-day Licensing Fundamentals events, please click on the events link in the rotating banner.
Historically Windows Enterprise edition was only available by attaching Software Assurance (SA) to Windows Professional edition. The Enterprise edition was never directly listed on the pricelist or listed as an OEM product. From the 1st March 2014, Windows 8.1 Enterprise is now on the pricelist without needing to pay the recurring Software Assurance annuity. For volume licensing (VL), this only affects Open and Select Plus programs because all the other VL programs include SA.
Customers who buy through the Open or Select Plus programs can therefore save some money and still get the benefits of Windows 8.1 Enterprise. What’s the difference between Windows 8.1 Enterprise licence only and Windows 8.1 Enterprise with SA?
We’ll describe Software Assurance in more detail in a forthcoming blog but in a nutshell, you get all the extra technologies with Enterprise but none of the licence modifications that are required to enjoy those technical benefits. The technical benefits for Windows 8.1 Enterprise include Windows To Go creator, Start screen control, DirectAccess, BranchCache, AppLocker, Virtual Desktop infrastructure (VDI) enhancements and Enterprise Sideloading. However you’ll still need SA to modify the licence rights to take advantage of VDI or Windows To Go. So you won’t be able to fully utilise Virtual Desktop Access (VDA) without SA. VDA is the ability to store the client operating systems on a server instead of directly on the desktop pc or laptop so the user can use any licensed device to access their Windows desktop. A form of thin client computing which gives IT much more control over the deployments.
Both Windows 8.1 Pro and Enterprise through VL are still upgrades and they require a qualifying underlying operating system. Also customers will be able to add SA onto Windows 8.1 Pro OEM licences up until July 1, 2014. The brief actually says the PC needs to have been purchased before July 1st but of course customers should be ok to add SA up to 90 days afterwards.
A question from Daniel: “I am sure that one of you mentioned that it’s possible to purchase Office 365 keys in advance under Open and FPP and have up to 5 years to activate them. Could you please confirm that as we have a client who is interested in buying 3 year term instead of 12 month subscription.”
This is a very common question and there are two terms to remember here.
1 – You have five years to redeem (activate) an Office 365 key after the purchase date
2 – You cannot have more than 2 years’ Office 365 service at a time
So if a customer with 100 users has an amount of cash they wish to use in a financial period and they’d like to buy Office 365 plan E3 in advance for several years they can purchase 5 x Office 365 E3 100 user keys. Office 365 uses dynamic keys, for example if a customer has 25 users, they will receive one 25-digit activation key which will enable all 25 users licences when that key is redeemed. This also applies to a customer with 100 users: 1 activation key. So for our example you don’t want to buy 500 E3 licences as that will result in one activation key for 500 users. Instead, purchase 5 lots of E3 SKUs for 100 users. That will result in 5 activation keys. Use the first key in year 1, then when your office 365 service is coming up for renewal pop up to the Microsoft Volume Licensing Service Centre (VLSC) and get the next key for year 2 and so on.
There are risks to this. Many cloud services have gone down in price so the customer may be losing out by buying future years in advance. And if they need to downsize to less than 100 users, they can’t change those keys.
Lastly, let’s examine the evidence here as I like to include my sources where possible.
When we talk to customers and partners about licensing, it’s lovely to see the light come on in people’s eye when they see that Microsoft licensing is not really that tricky. Then we move onto SQL Server which always proves the exception to the rule. To be fair SQL Server 2012 did simplify things somewhat and we’re glad to say now SQL Server 2014 has been released (1st April) the licensing stays unchanged for the most part.
Just two subtle changes.
One for high availability scenarios and the other for multiplexing with SQL Server Business Intelligence edition.
The rights to install and run a passive fail-over SQL Server have now moved to be a Software Assurance Benefit. over servers terms will move to the Software Assurance (SA) Benefits section of the PUR and thus only applies to SQL Server licences covered with SA.
Before you grumble about reduced rights, let’s examine why Microsoft did this. The passive server is considered ‘warm’ in that there’s no work offloaded from the primary server; it’s not clustered or load-balancing. During a fail-over event the passive server becomes active and the licence is re-assigned. If you don’t have Software Assurance (SA) on the SQL Server licence, the licence has to remain assigned to the newly active server for a period of at least 90 days. This is a bit of an issue for customers; having the SQL workload remaining on the secondary server for so long before they could fail back to the primary active server. Now the right to fail-over is granted through SA, customers can combine this with another SA benefit, Licence Mobility within a Server Farm, which allows customers to reassign licences between servers at will. So moving the fail-over right to become an SA benefit just neatens up the flexibility to manage high availability SQL environments for both planned and unplanned downtime.
Batch Processing with Business Intelligence Edition
The second licensing update is just for SQL Server 2014 Business Intelligence Edition. Microsoft are relaxing the multiplexing policy so it no longer requires a CAL for users or devices that access the BI server via a batch process. It’s a common question: if you have a middle-tier application being accessed by lots of users and the middle-tier application is connecting to SQL for reporting for example, do all the users and devices need CALs? Typically, yes they did. This is called multiplexing.
It caught many customers out so this licensing change goes some way to addressing the issue by enabling batch processing of data into SQL Server 2014 Business Intelligence edition without requiring CALs for the data sources supplying the data. Batch Processing for this purpose is defined as an activity that allows a group of tasks occurring at different times to be processed all at the same time.
This only applies to SQL BI Edition. All access to SQL 2014 Standard edition in the Server + CAL (Client Access Licence) model remain with all server access requiring a CAL.
Are there any other licensing changes in SQL Server 2014?
No. There’s no impact to the Disaster Recovery SA benefit, which applies broadly across Server products that are covered with active SA. Customers will still retain the benefit of installing and making available a cold SQL Server in a disaster recovery location.
The warm backup is the one we’ve described; active-passive.
And for active-active clusters there are no changes; full licensing applies to all server nodes in this type of configuration just like it has in the past.
Update August 2014 – Azure is now also available through the Open licensing programs in blocks of $100 monetary commitments. Think of it like a mobile phone top-up. The customer buys as many $100 blocks as they want and then have 12 months to use that balance across any Azure service that is available on the pay-as-you-go rates.
Windows Azure is a bit of an unsung hero in my opinion; it’s a $1 billion business for Microsoft and yet I’m still greeted by a lot of blank faces and frowns of uncertainty when I ask if people are selling or using Azure services.
As this is a licensing blog, I’m not going to describe Windows Azure but I will point you to the blog of Steve Plank, an Azure technology evangelist at Microsoft. His words of wisdom can be found on blogs.msdn.com/b/plankytronixx and he has a great cartoon-style way of explaining things. One of his explanations I reference a lot is how Azure virtual machines can be beneficial to customers with legacy applications.
Virtual machines, storage (great for disaster recovery solutions) and compute are three of the easiest services or commodities to understand and to licence and I’ll come back to these a little later.
How do I buy/licence Windows Azure?
Windows Azure is an ever-growing bundle of distinct cloud services, over 60 currently, which customers can use across Microsoft’s network of global datacentres. Each one of those services has its own cost and each one has its own usage-metre so typically you pay for consumption. Any solution you deploy on Azure is going to consume a mix of these services, each charged at their own price and unit. For example storage is pence per gigabyte per month; compute power is per compute size per minute and so on. This model is very similar to a mobile phone bill where you have a number of different charges accruing to your total monthly bill such as landline calls, premium rates, roaming services, data and texts. Luckily the idea of different usage meters and pricing does not affect the licensing.
Figure 1: (right) Windows Azure comprises over 60 services, each with its own usage-metre & price. (Left) Any solution you deploy utilises a combination of these services.
Customers purchase Azure services through two primary licensing vehicles; Microsoft Online Subscription Program (MOSP) or through an Enterprise VL Program.
MOSP is buying directly from Microsoft. Anyone can visit azure.com and sign up for the services. There’s a choice of pay-as-you-go (PAYG), also known as consumption, or to sign up and purchase a commitment offer.
With the consumption model you are typically paying the highest prices for Windows Azure services (I say typically because there are rare exceptions). High-volume discounts (graduated pricing) do apply though (an example is shown below in the table).
With the commitment model, you commit to pay a set, monthly amount and Microsoft reflect your commitment by offering a discount of 20-32% off the published PAYG consumption rates. The commitment plans do not have graduated pricing; they are based on a discount according to the level of commitment made (the minimum is currently £300 per month). Monetary Commitment is used like a debit card; you add in the same amount each month and your Azure usage draws down on the balance. Customers have a choice of making a 6 or 12 month commitment with the 12 month attracting a further 2.5% discount over a 6 month commitment. If you pay up front for the whole 6 or 12 months you’ll attract an additional 2.5% discount.
Should you exceed your monthly commitment amount, the overage (yes that is a real word) is charged at the published consumption rates. Overage is also not eligible for graduated pricing discounts (that is, it will be billed at base price tier regardless of volume). Again, this is a similar model to mobile phones, just in this case you’re purchase database, storage or compute.
When I say discount, I refer to the discount on the service price when compared to the PAYG base rates. You could think of it as a bonus; you’re getting more service for your money. For example, under the standard PAYG rates, the geo-redundant storage price for 5TB / month with graduated pricing would be £0.061 per GB for the first TB and £0.051 per GB for the next 4TB. However, under the commitment model, all 5TB of storage would be billed at the base rate of £0.061 /GB per month prior to the application of the volume discount.
Unlike Amazon Web Services (AWS), this discount is across the board so you could commit £10,000 on compute and you’ll get at least 23% discount on storage services. Unused commitment funds can roll over between months but can’t role over to another term so it’s often wise to choose a 12 months commitment term as it gives more time to use the funds.
Purchasing through an Enterprise program (EA) will usually deliver the best prices; significantly lower than the PAYG rates. Microsoft also recently committed to match the AWS published price for three key commodities: compute, storage and bandwidth and from March 2014 prices will drop for Block Blobs Storage and Disks/Page Blobs Storage to match AWS prices. And EA customers will gain an additional 27-36% discount off those matched prices. So that’s a huge benefit and you can be confident about your workloads being cheaper to run than on AWS.
Similar to how an EA allows you to commit upfront for expected units of Windows Server and then grow throughout the year, you can also commit upfront for expected use of Windows Azure and then grow throughout the year without paying a penalty. If you use more services than your commitment, you’ll get the same discount rates on that overuse; no extra paperwork to sign and no penalties for going over (other than the possibility of being billed quarterly rather than at the end of the year for the overuse if it exceeds 150% of your commitment amount). There are some great offers you can utilize too including funded engagement days to help you deploy but these need to be addressed through your reseller.
Scenarios are always good to illustrate points so let’s go through an example and for the mathematically challenged like myself, we’ll have a nice neat customer who commits $100,000 per year for the three year EA term. So they pay Microsoft $100,000 at the start of year 1 but the customer only spends $75,000 in year one. Because this customer signed up for a three-year deal at $100,000 per year they’ll automatically be billed for year 2 at $100,000. They can change their commitment level at each anniversary either up or down by contacting their reseller but if they do nothing their commitment stays the same.
Importantly, and this is why Microsoft offer those engagements, if the customer doesn’t consume their entire commitment in a year, the remainder is lost. This isn’t a penalty or a way of earning more money; it becomes very difficult for Microsoft to pay partners or talk to Wall Street if there’s uncertainty about having to refund money. It’s called a commitment because it is a commitment. So the customer forfeits the unused $25,000.
Let’s say the customer goes over their commitment and spends $140,000. They will have received several notifications by this point to keep them aware and the customer will simply get a bill at the end of the period for $40K and the commitment would be renewed for next year at the $100K level unless they contacted their reseller to change it.
So if a customer had committed £100,000 but went on to spend £1,000,000 in a quarter, Microsoft would happily say yes. And the only penalties are that they might be billed quarterly for the overuse and they may have obtained a better discount level by increasing their commitment prior to the overuse.
A customer with an existing EA could add as little as 1 x Azure Monetary Commitment SKU which is $100 per month, resulting in $1200 per year. While this is not recommended, it is programmatically possible.
An alternative way of purchasing Azure Services through an Enterprise program is through the Server and Cloud Enrolment (SCE). SCE came into being in late 2013 and makes it easy to combine your on-premises server and cloud commitments to Microsoft. If you want to learn about SCE in more depth please view the previous blog or Microsoft’s September 2013 recorded spotlight call.
In the SCE agreement, you make an install base commitment to one or more on-premises products such as Windows Server or SQL Server and this provides your EA discount level. If you make an on-premises commitment you can start using Azure services without needing to make an upfront monetary commitment in Azure. The prices you’ll pay are determined by your EA level discount and because you’ve made an on-premises agreement, Microsoft will add another 5% discount on top. So it’s possible to gain a maximum of around 41% off the Azure published PAYG prices through SCE.
If you only want Azure through an Enterprise program and don’t wish to make one of the on-premises commitments you can sign up for an Azure-only SCE. So perhaps this is ideal for an ecommerce organisation who are going to utilize a great deal of cloud services but don’t have the on-premises minimums for the other components of the SCE. In this situation you do make an upfront monetary commitment and working with your reseller, you can gain the equivalent of an EA price level based on your yearly Azure spend.
In terms of an example, a customer might commit to $200,000 so they get an EA on just Azure and also fall into level B pricing (attracting a 30% discount) because of that commitment. They do not however gain the additional 5% discount that a customer would get if they’d signed up for one or more of the other SCE pools; core infrastructure, app plat or developer.
Visual Studio 2013 was released in October 2013 and remains Microsoft’s flagship application development suite. As there is so much more to VS 2013 than just a set of development tools, the licensing can be a little daunting. A good guide can be downloaded here and I’ll try to summarise the main points and products in this post.
What’s the Difference between Visual Studio and MSDN?
Visual Studio (VS) came into play in the mid-nineties when it brought together development tools such as Visual Basic, Visual C++ and Visual FoxPro (whom I had the pleasure of working for many years ago). Visual Studio has since grown in capability much like the Office suite but it remains at its core a development application. The Microsoft Developer Network (MSDN) is a subscription programme that builds on VS and extends it to include access to Microsoft products (current and previous), technical support, training, forums, developer access to Azure and Office 365 and much more.
How do you buy Visual Studio?
There are free offerings of Visual Studio components (Express Editions) which generally offer a subset of the higher editions. There are also two MSDN subscriptions that don’t include Visual Studio but are a good fit for individuals involved in the development and test process without needing the VS Integrated Development Environment (IDE).
The recommended way for organisations to licence Visual Studio is through an MSDN subscription. The options range from Professional to Premium to Ultimate, each increasing in capability. The Test Professional edition is a specialist IDE designed for software testers and it will not support development. A comparison chart can be found here.
Each of the four MSDN Subscriptions above are available through all the VL programmes (Open, EES, EA, etc.) as well as full packaged product (FPP) and online through Microsoft. Buying Visual Studio Professional as a standalone is available through Select Plus, Open, FPP or online and is an option if the user doesn’t need access to development platforms (Windows, SQL Server, etc.) or the other benefits of MSDN.
We covered Server and Cloud Enrolment (SCE) in a previous blog but it’s worth having a re-read because it offers discounted licences of Visual Studio for organisations that can commit to a minimum 20 Licences of any combination of VS Ultimate with MSDN and VS Premium with MSDN.
Renewing MSDN subscriptions is far cheaper than the initial purchase because you are only paying for the software assurance (SA) component and it is possible to step-up or step-down between MSDN subscription levels. Typically, MSDN subscriptions through volume licensing will be coterminous with the existing VL agreement.
What do I need to licence?
Both Visual Studio and MSDN are licenced per user. The user can then install, run, design, develop and test their programs on any number of devices. These can be at work, home, clients’ sites or dedicated hosted hardware. The big restriction with the software obtained through MSDN is that it cannot be used for production use. In other words you can’t get Windows Server 2012 through MSDN and use it for the company infrastructure server; only for developing and testing. There are always exceptions and one is that users licenced for MSDN with Visual Studio Premium or Ultimate get a licence of Office Professional Plus 2013 for production use on one device (see below from the PUR).
There are a couple of gotchas: even if you have a technician who simply installs the MSDN software for the development team, they will require an appropriate MSDN subscription. Despite the fact they’re not doing any development or testing, they are installing the MSDN software (this is counted as using it) and must be licensed. If they are installing production licences as opposed to the MSDN licences, they wouldn’t need a subscription.
And the second gotcha, just to reinforce the non-production use limitation: with the MSDN subscription you can download the Windows client OS. But if you use it on a machine for anything other than development and testing (e.g. playing games or using Office) then you’re breaking the licence and you should be using a production licence of Windows client instead.
There are circumstances including demonstration and user-acceptance testing, where the software can be used by non-MSDN subscribers.
Other components that require licensing are the Team Foundation Server if you have a team of developers collaborating; the CALs for Team Collaboration Server; and Visual Studio 2013 has a new release management tool which can automate deployments to other servers – these servers need to be licenced with a Visual Studio Deployment licence (either standard or datacentre) and are licenced in the same way as System Center server management licences.
Visual Studio Team Foundation Server
Team Foundation Server supports the whole lifecycle of the software development process including version control, reporting and project management and is licenced in a server + CAL model. The good news is one server licence and one user CAL are included with Ultimate, Premium, Test Professional and Professional level MSDN subscriptions. Team Foundation Server and CALs can also be purchased standalone through volume licencing or retail channels.
Visual Studio Online
The cloud version of Team Foundation Server was named Team Foundation Services and that has now become Visual Studio Online; a complete application lifecycle management tool integrated with Windows Azure and available from any web browser. Sounds good but how is it licenced?
The clue was ‘integrated with Windows Azure’ because Azure is the billing platform for VS Online. There is a limited amount of free VS Online use with the basic plan (5 users and up to 60 build minutes per month which is actual computing time required to run your build) but after that an Azure subscription is required. You can think of VS Online more akin to Office 365 however because it’s software as a service (SaaS); you don’t need to be concerned with Azure storage, databases, VMs, etc. since VS Online is a finished service.
The plan options are shown below. For the MSDN subscribers we’ve been talking about, there’s no charge; they get free access to Visual Studio Online.
As you can imagine, there’s a lot more detail to licensing Visual Studio 2013 and there are likely to be changes early in 2014 so please listen into our monthly licensing spotlight calls where we cover this and other topics (you can view archived calls here).
Just when you think Microsoft licensing is straightforward and you’ve got a pretty good grasp on it, along comes SQL Server which has historically been the exception to the licensing rules. However with SQL Server 2012 Microsoft has done a great deal of simplification so it’s easy to understand the basics. You’re going to approach licensing differently depending on whether you’re deploying SQL Server in a physical or virtual environment.
SQL Server Licensing in a physical environment.
SQL Server is available is three main editions; Standard, Business intelligence and Enterprise. The Enterprise edition is licensed per core (no CALs required), Business Intelligence is licensed per server and client access licence (CALs) and the Standard edition can be licensed using either method. This is summarised below.
Before I present a little flowchart which might make you decision easier, let me clarify a few things about per-core licensing. We are talking per-core here and not per-physical processor, unlike Windows Server 2012. Currently SQL Server 2012 and BizTalk Server 2013 are the only Microsoft products licensed per-core.
To find out the appropriate number of cores you need to licence, simply count the number of cores in each physical processor in the physical server. Software partitioning doesn’t reduce the number of cores you need to licence. Once you have that you need to remember three things:
1. You need a minimum of four core licences per processor. So if you have a dual-core, dual-processor machine you would need to count that server as a dual, four-core processor and purchase licences for eight cores, despite only having four cores in total.
2. SQL Server 2012 core licences are sold in packs of two: each SKU covers two processors. So in our example above we would purchase four SQL Core licence SKUs to cover eight cores.
3. Certain AMD processors need to have a multiplication factor of 0.75 applied to the core count. See this link for the processors in question and what to do.
For server and CAL, SQL Server works in the same way as any other Microsoft server + CAL product. Licence the server(s), determine the number of unique users and/or devices accessing the SQL Server and purchase the appropriate number and type of CALs. SQL 2012 CALs will allow access to all previous versions of SQL Server. Also you don’t require a separate CAL for every SQL Server; a SQL Server 2012 CAL allows access to all the SQL Servers within the organisation.
A simple way of determining the edition and licensing of SQL Server 2012 is below.
SQL Server Licensing in a virtual environment.
Regular readers of the licensing blog will be saying “I bet this has something to do with Software Assurance (SA)”. Well, you’re partly correct. I’m going to assume you’re running Windows Server 2012 Datacenter edition on these boxes just for simplicity and I haven’t included details of the VOSE OS.
For SQL Server Standard and Business Intelligence editions you can licence individual virtual machines (VMs) using the server + CAL model. Simply purchase one server license for each VM running SQL Server software, regardless of the number of virtual processors allocated to the VM. Then purchase the appropriate number of CALs.
For example, a customer who wants to deploy the Business Intelligence edition running in six VOSEs, each allocated with four virtual cores, would need to assign six SQL Server 2012 Business Intelligence server licences to that server, plus the CALs to allow access.
For SQL Server Standard and Enterprise editions you can licence individual VMs using the per-core model. Similar to physical OSEs, all virtual cores supporting virtual OSEs that are running instances of SQL Server 2012 must be licensed. Customers must purchase a core license for each virtual core (aka virtual processor, virtual CPU, virtual thread) allocated to the VOSE. Again, you are subject to the four core minimum, this time per VOSE. For licencing purposes, a virtual core maps to a hardware thread. When licensing individual VMs, core factors (i.e. the AMD processor 0.75 factor) do not apply.
Two examples are shown below for clarification: SQL Server core licences required for a single VOSE on a dual, four-core processor server and for two VOSEs.
With the SQL Server 2012 Enterprise edition (note: not Standard edition), if you licence all the physical cores on the server, you can run an unlimited number of instances of SQL Server, physically or virtually as long as the number of OSEs with SQL doesn’t exceed the number of licensed cores. For example, a four processor server with four cores per processor provides sixteen physical cores. If you licence all sixteen cores, you can run SQL Server in up to sixteen VOSEs (or the physical OS and 15 VOSEs), regardless of the number of virtual cores allocated to each VM. What if you want to run more than 16 VOSEs in this case? Well, you are permitted to assign additional core licenses to the server; this is known as licence stacking.
Here’s where Software Assurance comes into play. Licence all the physical cores with SQL Server 2012 Enterprise Edition and software assurance and your licence rights are expanded to allow any number of instances of the software to run in any number of OSEs (physical or virtual). This SA benefit enables customers to deploy an unlimited number of VMs to handle dynamic workloads and fully utilize hardware computing capacity. As with most SA benefits, this licence right ends if SA coverage on the SQL core licences expires.
Licensing for maximum virtualization can be an ideal solution if you’re looking to deploy SQL Server private-cloud scenarios with high VM density, Hyper-threading is being used so you’re looking at a lot of virtual cores to licence, or you’re using dynamic provisioning and de-provisioning of VM resources and you don’t want the headache of worrying about adjusting the licence count. As you can see in the diagram below this can be very cost-effective.
We run a regular licensing spotlight call on behalf of Microsoft where we cover this and other topics in more detail. Please join us for the next call and you can view archived calls here.
Office 365 is a brand. But Microsoft has a challenge to overcome by using that name. Their challenge is that the Office name is so synonymous with Word, Excel, PowerPoint and so on that customers and resellers can get confused with what Office 365 actually is.
In a nutshell Office 365 is either the Office suite of client applications (Word, etc.) or online cloud services such as Exchange, SharePoint and Lync or both of those.
Below is a table containing most of the commercial Office 365 options (aka plans) you can buy along with a summary of whether that plan includes cloud services and the Office client. A high-level list of what’s included can be found on office.microsoft.com.
Licensing is straightforward with Office 365. Whatever Office 365 plan you have, the licence is per-user. This is a big difference from on premise Office which remains per-device. If you have Exchange, Lync or SharePoint on premise you can choose to licence access to these on a per-device or per-user basis or even to mix and match but the Office 365 cloud services are only per-user.
Why is this? One of the principles of cloud computing is anywhere access and typically the user will travel more than the device. I want to access my services at home, at work, at the airport, around my mum’s house. One in five men have participated in a conference call whilst on the toilet (according to research on Wtop.com). It makes sense to licence the user because they can access from any device. I can email from any device, IM and join a video-conference from any device (that supports Lync), get to my files and sites and business intelligence in SharePoint from any device. And if the Office 365 plan includes the Office client, then that can be locally installed on up to 5 devices concurrently and these can be a mix of Windows, Mac, corporate machine or personally-owned PCs.
One other important aspect to Office 365 licensing is the concept of a USL or User Subscription licence. Most Microsoft server software requires a Client Access Licence (CAL) to enable access to the software’s features. Windows Server, Exchange Server, Lync Server and SharePoint Server all require CALs. Office 365 is no exception but we call a CAL a USL because you only subscribe to online services, they’re not perpetual unlike CALs which you don’t need to buy again every year. The monthly, per-user cost of Office 365 includes all the USLs you need however the Enterprise Office 365 plans also include an implicit CAL whereas Midsize Business and Small Business plans do not.
Why is this important? If you have a hybrid infrastructure with some on premise Exchange, Lync or SharePoint servers then your users will need CALs to access those as well as USLs to access their Office 365 services. Having implicit access rights granted within the USL means you do not need to maintain CALS for those users who are covered by an Office 365 plan (one which includes cloud services). This is detailed in the Product Use Rights document for each of the on-premises servers, an example of which is the Exchange Server 2013 Standard requirements below showing that an Office 365 E1, E3 or E4 USL is fine for access but doesn’t list Midsize or Small Business USLs.
In summary, Office 365 is a big beast which can encompass the Office client suite, cloud services or both depending on which Office 365 plan you have. Each plan differs in individual features but is broadly licensed the same way; per-user. A bonus of subscribing to the Enterprise plans that include cloud services is they allow the licenced user access to on premise Exchange, Lync and SharePoint servers without needing a separate CAL.