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Israel Plans to End Licensing Agreement with Microsoft

Reported by Reuters, early August 21, 2018, the Israeli government plans to not renew their contract with Microsoft (NASDAQ:MSFT) at the end of the year.  The Israeli government sites that the new change in the licensing agreement would skew costs too high as it “would double the price.”

The Israeli government uses Microsoft products for their desktop and server software for various government buildings and offices.  The total cost under the current contract has Israel paying over 100 Shekels, or $27 million Dollars, a year on the software.  But, under Microsoft’s new licensing agreement with Israel, they could potentially have to pay highs of 200 Shekels, or $54 million Dollars, a year.

The current licensing agreement allows the Israeli government to own the software and do as they please with it.  Under the new licensing agreement, the government would essentially be renting the software on a subscription-based system.  Additionally, changes such as moving data storage to the cloud, are not wanted by the Israeli government as it does not fit their need’s currently.

Reuters also reported that the Israeli government has been in negotiation with Microsoft “for a year with no avail” and that Israel is going to put their current license on hold as to use the system without further payments.  Microsoft in Israel declined to comment on the situation.

It sounds like Microsoft is making a push towards converting customer, particularly in the public sector with its Azure Stack.  The Azure Stack offers a wide-variety of cloud computing services on a subscription-based platform.  These services are unique to cloud computing with services such as on-premise infrastructure, which is not offered by competitors in the US.

With the new licensing agreement which will allegedly “double the price” of current license, it will be interesting to see as the Azure Stack is adopted by governments already using Microsoft.

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