Fact; Microsoft has discontinued the Windows Enterprise E3 buy-out product for the Microsoft Open Value subscription contracts per the April price list. It has been replaced with the Windows Enterprise LTSB (Long Term Servicing Branche) product. Besides that, Microsoft has not changed the Agreement itself. This seems just a little thing, because customer can still buy-out Windows Enterprise? But in fact it is a big ‘thing’. This is what you should bear in mind.

The basics about Open Value Subscription
Microsoft offers customers with 5 to 500 (or even a bit more) devices the Open Value Subscription Agreement. A distinct characteristic is that customers with such a contract do not obtain perpetual licenses, but just subscribe to the use rights for the technology and Software Assurance is default. Another characteristic is that customer have to choose at least one ‘Enterprise’ product to be able to start such an Agreement. The Enterprise products are:
• Office Professional Plus or eligible Office 365 suites
• Core CAL or Enterprise CAL Suite
• Windows Enterprise E3 or Windows Enterprise LTSB

After a three year period customer can simply stop using the technology or enter into a new or other type of Agreement. But customers can also choose to ‘buy-out’ their products which will give them the ‘everlasting use rights’ for that specific version and edition of the software. The Software Assurance part cannot be bought-out.

For starters, is Microsoft breaching its own contracts?
Let us take a look at the legal part to start with. Any customer enjoying the benefits of the Open Value Subscription (OVS) has to enter into an Agreement with Microsoft. In chapter 9 of the OVS Agreement we can read specifics of the buy-out option, which is:

“Customer may elect to obtain perpetual Licenses for Products at the end of the first or renewal term; provided”

When we look at the definition of ‘Product’ in the same Agreement we read:

“Product” means all products identified in the Product List, such as all Software, Online Services and other web-based services, including pre-release or beta versions.

And for ‘Product List’ we read:

“Product List” means the statement published by Microsoft from time to time at the Volume Licensing Site. The Product List includes Product-specific conditions or limitations on the acquisition of Licenses for Products.

Let us take an example to find out if Microsoft is breaching its own agreements with the change. If I’m a customer with 150 PC’s I would like to enter into an OVS and will choose Windows Enterprise E3 (semiannual channel) as my ‘enterprise’ product. With what is written down in the contract I have the right to buy-out this ‘Product’ at the end of my contract. But this specific ‘Product’ is no longer on the ‘Product List’. It has been replaced with the Windows Enterprise LTSB product, but that is not what I was using during the time of my contract. In fact, this is not the product I should be able to ‘buy-out’ and it is most certainly not the product I want to buy-out and use in the future.
In the end, in the contrary to what is agreed upon in the mutual OVS Agreement, I will not be able to buy-out what I have chosen and I am using. This might not be a legal breach, but Microsoft is not enabling me to do what we have agreed upon in the mutual Agreement. At least it is strange.

windows buy out option microsoftTechnical consequences
If I, as a customer, would choose to go for this new strange buy-out option this has big technical consequences. It means that my IT department has to re-install 150 PC’s (de-install Windows Enterprise E3 and install Windows Enterprise LTSB). That is a lot of work that I, as a customer, are not happy about.

Impact on future use
Besides the technical impact there is a huge impact on future use. In the second half of 2018 the all new Office 2019 suite will be launched. Microsoft has announced that this will only be supported through a ‘click-2-run’ installation on Windows operating systems with semi-annual updates. With the Windows Enterprise LTSB version of the desktop OS, as a customer, this means I will not be able to install and run new – as off – 2019 editions of the Office Suite applications. This new buy-out option therefore is not future proof and with that another dissatisfier for me as a customer.

Security problems
To close my, as a fictional customer, ‘unhappiness’ I’m looking at security. Microsoft also has announced they will only support the latest version (eg branch) of the Windows 10 desktop operating system and óne previous version. With an update cycle of 6 months for Windows as a Service this means that after just 18 months there will be not more updates for my ‘newly installed’ Windows Enterprise LTSB. This is a security problem.

All or nothing
Some other hurdles. When customers want to buy-out, they are obliged to buy-out all of their enterprise products. So when you have Office Professional Plus, the Core CAL Suite ánd Windows Enterprise E3 in your contract, you will have to buy-out all three products. You cannot skip Windows Enterprise because of the LTSB change and as a customer you will end up with paying for the Windows Enterprise LTSB buy-out where you actually want to use Windows Enterprise E3.

How about Windows Professional?
Ha, you think, there is a solution! Windows Enterprise through volume license has a down edition option. So you simply install and use Windows Professional semi-annual channel instead. With that you have the updates, the security patches ánd you will be able to run Office 2019 when it is available. Great, but there are some downsides to this option too. For starters it is Pro and not Enterprise, so you will be lacking the Enterprise features you (maybe) got used to during your contract period. Such things as Bitlocker (encryption) management is not available for the Windows Pro editions. Secondly, license assignment for volume licensed Windows Desktop are permanent (please see Product Terms, section Windows, chapter 2.1.1). When you change the underlying hardware and Windows Pro OEM license you cannot re-assign the Windows Pro volume license. This means that over time you end up with a mixture of Windows Professional OEM and Windows Professional volume licensed computers, which is not good for management.

Totally understandable
The ‘why’ of the change is totally understandable. Microsoft wants its customers by default on the latest version of the technology; the service instead of the product. And most customers might want this as well. But with the new buy-out product Windows Enterprise LTSB Microsoft is forcing its customer back from the service (Windows Enterprise E3 during the time of the agreement) to the product afterwards. There is simply no other option and that is not the most elegant of agreements.

Large Enterprises
At the moment of writing the members of the Global Software Licensing Specialist are investigating if the changes to the Open Value Subscription Agreement also apply to the Enterprise Agreement Subscription for large Enterprises and if the Windows Enterprise E3 buy-out product has also disappeared from the ESA pricelist. Because this pricelist is not publicly available we need to do some research. When there is news we will update this article.

Any questions, remarks, tips or user experience on this topic? Please contact one of the case handlers:
Marcel Maul
Erol Anil
Storm Rohnstrom
Peter van Uden

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