The Westcoast Cloud Team
November 30, 2022

You asked, Microsoft listened…

You and your fellow partners have been calling for Microsoft to:

  • Simplify licensing
  • Expand the range of products that can be offered to customers at fixed pricing for longer terms
  • Provide more opportunities for customers to have Microsoft software hosted on partners’ infrastructure


In October 2022, Microsoft finally responded. It has now implemented major revisions and upgrades to its outsourcing and hosting terms that will benefit partners and customers alike.

Here’s a quick overview of what’s changed, and what it means for you.

Flexible Virtualisation Benefit

Under this benefit, customers can use their own licensed software to build and/or install solutions and run them on any Authorised Outsourcers’ infrastructure – dedicated or shared.

This benefit is available to customers with Software Assurance or subscription licences. It will greatly expand their choices when outsourcing – because now, they can choose to focus on physical servers or license their virtual machines.

The Flexible Virtualisation Benefit doesn’t just apply to servers, it applies to desktop licensing as well. So customers can use their software on Authorised Outsourcers’ environments, but also on other products too…


Eligible desktop licences that the Flexible Virtualisation Benefit applies to:

  • Windows 11 Enterprise E3/E5 user subscription licences, or Windows 11 Enterprise device licences, when the end user’s device has a qualifying base operating system
  • VDA E3/E5 user subscription licences, or VDA device subscription licences, when the end user’s device does not have a qualifying base operating system
  • Microsoft 365 E3/E5/F3 user subscription licences, when the end user also needs to be licensed for office productivity apps on a secure, managed device


How the Flexible Virtualisation Benefit helps partners:

  • Gives outsourcing partners the opportunity to host customer solutions on more flexible hardware configurations
  • Enables partners that sell licence-included hosting, such as Windows Server under the Services Provider Licence Agreement (SPLA), to allow customers to install customer-licensed products (e.g., SQL Server, Microsoft 365 Apps) on their hosted solutions


Virtual core licensing option for Windows Server

Before Microsoft introduced its changes in October, Windows Server was licensed by physical core, which meant customers had to have access to the physical server hardware to ensure that they had enough Windows Server licences to cover all physical cores in the machine. This method was often expensive for customers, especially if not all cores were being utilised by the virtual machine and the VM was moving between physical hosts.

As part of the Flexible Virtualisation Benefit, Microsoft is now offering Windows Server via a licence model that is compatible with shared server/multi-tenant outsourcing. This makes it possible to license Windows Server on a virtual core basis.

With the virtual core licensing option, partners can license Windows Server by the number of virtual cores that customers are using in their virtual machines – making Windows Server cheaper and easier to license when outsourcing.

With these changes, customers now have additional options to license their servers, offering greater flexibility at a potentially lower cost.


How the new licensing option for Windows Server benefits partners:

  • This change will help partners appeal to customers with legacy Windows Server workloads by enabling them to move these workloads from on-premises servers to the cloud, with an array of licensing and cost options available.


Cloud Solution Provider-Hoster (CSP-Hoster) programme

A new CSP-Hoster programme has been introduced for existing Qualified Multitenant Hoster (QMTH) partners and CSP direct-bill partners.

The programme will enable partners to pre-build hosted desktop and server solutions that they can sell to customers with licences in CSP, or to customers that already have licences. For example, as a CSP-Hoster partner, you’ll say, “Should I sell you a licence, customer? Or will you bring your own licence?”.

Partners in this programme do not need to acquire distinct media and keys from each customer to deploy their solution. Instead, they can access a catalogue of Microsoft software that they can use to pre-build solutions that are ready for customer use.

At launch, the CSP-Hoster programme will be limited to QMTH-eligible CSP direct-bill partners with an active SPLA only, but Microsoft plans to expand programme eligibility over time – so stay tuned!


What do you have to do next?

In short – nothing!

The changes came into effect on 1 October 2022, so you can offer these additional options to your customers right now.

If you’d like support with any of these changes, please get in touch with our Westcoast Cloud or Westcoast Limited licensing specialists via: or