Microsoft handed Amazon and Google a new reason to go after Microsoft customers and they are doing so with gusto

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  • After Microsoft announced a change that would essentially raise prices on its customers if they use Windows or Microsoft’s database on rivals’ clouds, those rivals are fighting back.
  • Google’s head of cloud sales tweeted a slam about the new rules.
  • And Amazon Web Services has come out swinging, with a couple of executives laying out a case against Microsoft because of the change.
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Last week, Microsoft announced a change that essentially raises prices on its customers when they use Microsoft software on competitors’ clouds. Now those competitors are fighting back.

Google’s new head of cloud sales, a former SAP executive, Robert Enslin, tweeted, “Shelf-ware. Complex pricing. And now vendor lock-in. Microsoft is taking its greatest hits from the ’90s to the cloud.”

And not only did Amazon Web Services CTO Werner Vogels call Microsoft’s change a “bait and switch” in a tweet but AWS Vice President Sandy Carter took up the issue by writing an article on LinkedIn. In it she claimed that AWS remains “the best place for Windows software, and also implied that, even with the licensing changes, Microsoft customers will save money by using AWS.

On the one hand, this is a bit of smack talk by competitors that got outplayed.

On the other, Microsoft’s move is a dangerous one, the kind of thing former CEOs Bill Gates and Steve Ballmer might have done. It’s the opposite of the kinder, more open Microsoft that’s been the hallmark of CEO Satya Nadella’s reputation.

And it gives Microsoft’s competitors a new marketing message to reach out to Microsoft’s customers and encourage them to ditch Microsoft’s technology altogether.

Carter is making no bones about that, asking in post “Do you really want to bring along the licensing baggage of the old world, especially if those rights continue to change?”

If Microsoft’s customers feel that Microsoft is raising prices on them unfairly, they will be more likely to look for alternatives.

To recap, Microsoft changed its licenses for two of its most popular corporate on-premises products: its database, SQL Server, and its operating system, Windows Server, when those products are used with a rival’s cloud.

Read: Microsoft has found a way to hurt the partnership between Amazon Web Services and VMware by raising prices for customers using non-Microsoft clouds

After October, 2019, Windows Server customers are no longer allowed to bring their unlimited use licenses to the cloud of their choice, Microsoft said (PDF). If they use Windows on AWS or Google, they will have use the pay-for-what-they-use model, which will almost certainly cost more, Directions on Microsoft analyst Wes Miller told Business Insider.

SQL Server database customers will be required to buy an extra and pricey service known as Software Assurance in order to use AWS, Google and Alibaba’s clouds, especially if they’ve been using VMware’s software to manage their Microsoft applications.

This undermines a key marketing strategy that AWS and VMware have been using to woo Microsoft customers to AWS.

Read: How VMware became a secret superpower in the cloud wars and why Amazon Web Services should not be happy but Google and Microsoft are thrilled

While the licensing change technically applies to Microsoft’s own cloud as well, Microsoft offers its customers special discounts which offset that price increase. So, by closing a licensing loophole, Microsoft hopes to make its own cloud less expensive than its competitors and keep customers from defecting to rival’s clouds.

Get the latest Microsoft stock price here.


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Cloud Wars

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