Enterprise desktop administrators have to wade into the waters of licensing for the Windows 11 OS and associated business applications, security systems, cloud services and more.
With numerous options to choose from depending on use cases, IT departments need to determine exactly what their desired Windows 11 license comes with.
Windows 11 licensing with Office 365, Microsoft 365 and Windows 365
Microsoft offers several services that include the number 365 -- Office 365, Microsoft 365 and Windows 365 -- some of which offer Windows 11 licensing with the right bundle. It's worth getting to know each service, especially Office 365 and Microsoft 365.
This is a cloud subscription service that eased the pain of desktop software maintenance and licensing for businesses. Organizations can choose from a range of features for this service, including a suite of productivity apps, cloud storage, unified communications and more.
The Microsoft 365 service was initially thought to be a replacement for Office 365, but they function to this day as separate services. Microsoft 365 serves as a more extensive feature set than Office 365. In addition, Microsoft defined a new product set called Microsoft 365 for frontline workers that includes both Office 365 and Microsoft 365 products, but this is set to an Enterprise class license only.
The newest of these offerings, Windows 365, is a cloud service that distributes Windows 11 to clients as a service in much the same way Google distributes ChromeOS for Chromebooks. Microsoft calls this approach to OS licensing and delivery a Cloud PC. Windows 365 is the OS -- not Office 365 or Microsoft 365, which are application services. As such, it is outside of the purview of this discussion.
Office 365 and Microsoft 365 licensing comparison
Microsoft provides a clear, well-defined matrix titled "Microsoft 365 and Office 365 plan options." After comparing the information from that site against Microsoft's Business and Enterprise Licensing sites, this table shows the viable licensing options at the time this article publishes (Table 1).
|Service Family||Plan Family||Plan Designation||Annual Subscription Price (Per User, Per Month)||Notes|
|Business (300 user maximum)||Microsoft 365||Business Basic||$6.00||Formerly Office 365 Business Essentials.|
|Business Standard||$12.50||Formerly Office 365 Business Premium. Includes all Business Basic features.|
|Business Premium||$22.00||Formerly Microsoft 365 Business. Includes all Business Standard features.|
|Apps for business||$8.25||Formerly Office 365 Business.|
|Enterprise (Unlimited users)||
|F3||$8.00||Includes Office 365 F3.|
|E3||$36.00||Includes Office 365 E3.|
|E5||$57.00||Includes Office 365 E5.|
|Apps for enterprise||$12.00||Formerly Office 365 ProPlus.|
Business and Enterprise Microsoft products
Understanding the distinction between Business and Enterprise class products is relatively simple. Enterprise class products include Microsoft 365 and Office 365 products that offer the following:
- Unlimited user licenses.
- Payments on an annual subscription with autorenewal.
- Some increased functionality in applications, services and tools compared to Business-level products.
Business class products include Microsoft 365 products only. They also have the following:
- A 300-user limit.
- Per user, per month annual subscriptions, as well as month to month at a higher monthly fee.
Microsoft's Enterprise class products include Office 365 E3 and E5 and Microsoft 365 E3 and E5. Table 1 shows a big difference in per user, per month price between comparable Office 365 and Microsoft 365 products. The E5 products have similar features, but the Microsoft 365 E5 plan includes a Windows OS upgrade and Microsoft Teams Phone System to manage phone calls through Teams, as well as other advanced features and Intune.
Microsoft frontline licensing
Frontline is a new licensing designation by Microsoft. Frontline workers include those who are first contact with the customer, such as clerks, cashiers, healthcare staff, customer service reps and manufacturing workers. These users are more productive and easily managed using cloud technology and services. Frontline products include unlimited users similar to Enterprise editions and cost savings compared to more fleshed-out license models from Table 1.
Frontline encapsulates three license models: Microsoft 365 F1 and F3, as well as Office 365 F3. There are plenty of differences between these license models (Table 2). Some of the most notable differences include that Microsoft 365 F3 is the only frontline bundle that includes Windows licensing and the desktop versions of the Office productivity suite.
|Feature||Office 365 F3||Microsoft 365 F1||Microsoft 365 F3|
|Cost per user, per month||$4.00||$2.25||$8.00|
|Supplemental features||Includes all Microsoft 365 F1 features||N/A||Includes all Microsoft 365 F1 features|
|Office apps||Mobile and web apps only||Mobile and web apps only||Mobile, web and desktop apps|
|Windows Enterprise E3||No||No, but it includes Intune, Endpoint Configuration Manager and Admin Center||Yes, and it also includes Intune, Endpoint Configuration Manager and Admin Center|
|Teams||Yes, includes meetings, chat and calling||Yes, includes meetings, chat and calling||Yes, includes meetings, chat and calling|
|OneDrive storage||2 GB per user||2 GB per user||2 GB per user|
|Microsoft Defender Antivirus||No||No||Yes|
|Information protection||No||Azure P1||Azure and Windows|
|Identity and access management||No||Azure Active Directory Premium||Azure Active Directory Premium|
Microsoft licensing add-ons
There are additional licensing options that may have bearing on a purchase decision. IT teams have to make decisions regarding the following options:
- One-time purchase vs. subscription payments.
- Additional storage purchases separately from the license.
- Additional features, such as advanced compliance, advanced security and Microsoft Viva AI services.
- The ability to stack licenses, such as Microsoft 365 F1 and Office 365 E1, to merge the features. A Microsoft Partner might be best to handle this process.
3 example cases for Windows licensing
A few examples of pricing scenarios should provide a basic idea of how licensing can work for your organization, using the flexible pricing policies of Microsoft. While Microsoft does not always explain licensing in a simple fashion, the vendor's chat service for customers can be extremely helpful. Depending on the desired package, the chat service may even refer customers to a Microsoft Partner who will reach out.
These three use cases are not intended to be specific recommendations but simply to show how business requirements can be matched to license features to select the proper license and how Microsoft's licensing models are flexible.
This example is a small business with 200 users that requires Word, Excel, PowerPoint, collaboration tools, and email via Exchange and Outlook. It has Windows PCs and mobile devices, and there is no need to open or edit documents without internet access. It is currently using Norton Antivirus and does not want to switch to Defender. It also does not have in-house IT support.
License choice: Microsoft 365 Business Basic.
Cost: $6.00/user/month * 200 Users = $1,200/month with annual subscription prepaid.
Additional OneDrive storage may be needed, which Microsoft provides as an add-on for an additional fee.
This option is based on the business's need for no more than 300 users, only mobile and web apps, no advanced apps, no desktop software and no need for Microsoft's security suite or advanced threat protection.
Suppose this small business decided to switch to Microsoft's security suite -- Defender and Advanced Threat Protection -- and had some macOS and iOS devices. Assuming it had IT staff to support the security options, it would be better off with the following.
License choice: Microsoft 365 Business Standard.
Cost: $12.50/user/month * 200 users = $2,500/month with annual subscription prepaid.
This company is an enterprise organization with 700 users that uses a range of Windows, macOS and iOS devices for both remote and in-office work. These users may be working offline, so they'd need the offline desktop versions of the productivity suite, more than 1 TB of cloud storage for some users and some advanced apps. This organization will be migrating to Windows 11 shortly, and the IT team wants to keep using Microsoft Intune Suite.
Since the organization has more than 300 users, it needs an Enterprise plan. Frontline workers are not in play here, so one of the Office 365 or Microsoft 365 plans works for it. Because it needs Windows 11, that eliminates Office 365, so the only options are Microsoft 365 E3 or E5. There is no requirement for Power BI Pro, Azure Information Protection P2, Microsoft Defender for Cloud Apps or other advanced features.
License choice: Microsoft 365 E3.
Cost: $36/user/month * 700 users = $25,200/month with annual subscription prepaid.
After reviewing the Microsoft 365 and Office 365 options, this business did not have the security, data protection and other advanced requirements provided by E5 in either suite. Because the organization wants to wrap Windows 11 into the package, Microsoft 365 E3 is the best fit.
In the case of another large enterprise organization, the executives and IT team are looking for different licenses for different company organizations. It has a large number of frontline workers, a large number of business and finance users, and some power users. All users need email services -- in this case, Exchange and Outlook.
There are 2,000 total users, including 1,000 frontline workers that need Intune, Defender and a Windows 11 upgrade but only the mobile and web versions of the Office apps. There are also 200 IT staff and power users, all of whom need premium apps, mobile and desktop, and additional OneDrive and mailbox storage. 300 executive, business and finance users require basic apps; advanced collaboration, including audio conferencing; and mobile and desktop. Due to the sensitive nature of this group's data, advanced threat and data protection are needed. There are 500 sales workers who only need mobile apps, collaboration, email and the minimum OneDrive storage.
License choices: Microsoft 365 F3 for the 1,000 frontline workers, Office 365 E3 for the 200 IT staff and power users, and Microsoft 365 E5 for the 800 executives, sales, finance and business users.
Cost: $8/user/month * 1,000 frontline workers = $8,000/month.
$23/user/month * 200 IT staff and power users = $4,600/month.
$57/user/month * 800 executive, sales, finance and business users = $45,600/month.
The total cost of all combined licenses is $58,200/month, but targeted licensing can bring the cost down to $55,800/month via a $669,000 annual payment.
The role of Microsoft partners in Windows 11 licensing
For complicated licensing scenarios or when organizations want to know their best outcome, Microsoft refers you to a partner for sales. It's hard to project what the costs and suggestions from these partners will be as they are experts in Microsoft licensing with vast amounts of information at their fingertips. Their goal is simply to pair you with a licensing bundle that suits your needs.
Some viable partners include SoftwareKeep, Agile IT, True.org and DMC. These third-party vendors can help customers navigate complicated licensing models, and some of these partners even offer third-party support and other services.
4 steps to help evaluate Windows 11 license needs
There are several basic and nearly universal recommendations based on the factors outlined above. here. Every organization should perform a thorough evaluation of its business needs. This includes deciding on mobile vs. desktop apps and device management, storage needs for different user groups, a ramp-up plan for Windows 11 migration, security needs, Microsoft Teams functionality and, obviously, much more. Beyond that internal diagnostic, these steps can help organizations arrive at their final destination from a licensing perspective:
- In evaluating a Windows 11 upgrade strategy, remember that Windows 11 has some hardcore device requirements that may prevent Windows 11 installation on current hardware. Work out any device refresh strategies before paying for Windows 11.
- It's possible to combine licenses to add features or to satisfy needs for disparate business groups. It may also be advantageous to split out certain solutions separately rather than go to a higher license platform.
- A nice tool for creating a business plan is Microsoft's "Find the right plan for your business" tool. This tool asks basic questions and spits out a generic license recommendation. The various comparison charts that Microsoft offers can also help teams find the best way to align needs with features.
- Contact a Microsoft Partner. Now that you have some education on licensing products, you can talk to a partner intelligently. These partners are experienced and have connections with Microsoft; they make your job easier.