M365 Goes Local + July Price Hikes Are Official
Microsoft just pivoted from "cloud-first" — Azure Local and M365 Local are now GA with air-gapped AI via Foundry Local. Meanwhile, July pricing increases are locked in: E3 jumps to $39/user. Plus Power BI's February update and a Fabric Copilot tenant setting change you need to review.
📋 TL;DR — What You Need to Know
- 🚀 Azure Local & M365 Local now GA: Air-gapped AI is here via Foundry Local
- 💰 July 2026 pricing increases confirmed: E3 jumps to $39/user/month
- 📊 Power BI February update: Input slicer GA, new DAX functions, Copilot expansions
- ⚙️ Fabric Copilot tenant setting: Now enabled by default — review your admin config
🔴 Microsoft 365 Local & Azure Local — General Availability
Microsoft just made a significant pivot from their "cloud-first" mantra. Azure Local and Microsoft 365 Local are now globally available, with the flagship feature being Foundry Local — enabling large-scale, multimodal AI models to run in completely air-gapped environments.
Defense contractors, government agencies, healthcare systems, and critical infrastructure operators can now process sensitive data locally while retaining full AI capabilities. This is a direct response to data sovereignty concerns that have been a barrier to cloud adoption in regulated industries.
What to tell clients: Organizations with strict data residency requirements now have a Microsoft-supported path to AI without internet connectivity.
🔴 M365 Pricing & Packaging Changes — Effective July 1, 2026
Microsoft has officially announced global pricing increases:
| SKU | Current Price | New Price (July 2026) |
|---|---|---|
| M365 E3 | $36/user/mo | $39/user/mo |
| M365 F1 (w/ Teams) | $2.25/user/mo | $3.00/user/mo |
Added Value (June–August Rollout)
- Defender for Office 365 Plan 1 added to more suites
- Intune Remote Help & Advanced Analytics included
- Expanded Copilot Chat features
The 8% E3 increase is being positioned alongside packaging enhancements, but organizations need to audit now to identify savings opportunities before renewal.
🟠 Power BI February 2026 Feature Summary
The monthly update brings several worthwhile improvements:
Now Generally Available
- ✅ Input slicer — interactive filtering directly in reports
- ✅ Paste selections into any report slicer
New DAX Functions
TABLEOFandNAMEOF— improved modeling flexibility
Copilot & AI
- Expanded prompt input character limit
- Conversational Copilot now available in Power BI apps
Deprecations to Track
| Feature | Retirement Date |
|---|---|
| Hierarchies in Power BI Scorecards | April 15, 2026 |
| SSRS/PBIRS/SSAS Management Packs in SCOM | January 2027 |
| Legacy Import Excel & CSV experience in Service | TBD |
🟠 Fabric Copilot Capacity Tenant Setting Change
As of February 8, 2026, the tenant setting "Capacities can be designated as Fabric Copilot capacities" is now enabled by default for all tenants.
If your organization requires restricted Copilot access, review your Fabric Admin portal settings immediately.
⚡ Quick Hits
- FabCon Atlanta — March 16-20, 2026 | Use code
FABCOMMfor $200 off registration | DataViz World Championships finals happening live
✅ Admin Action Items
- 📋 License Audit: Review M365 license utilization before July renewals. Identify unused/misassigned licenses to offset the 8% E3 increase.
- ⚙️ Fabric Admin Review: Check whether the Copilot capacity tenant setting aligns with your governance policies.
- 📅 Deprecation Calendar: Note the Power BI Scorecards hierarchies deadline (April 15) if your org uses this feature.
- 🏢 Azure Local Assessment: For clients with air-gapped requirements, schedule a discovery call to discuss Foundry Local capabilities.
🔥 The Bottom Line
Microsoft's "Local" push signals a recognition that not everything belongs in the cloud — especially for organizations with strict data sovereignty requirements. The July price increases are another reminder to audit your licensing before renewals.
Questions about these updates? Fireside Cloud Solutions is here to help you navigate the M365 landscape.
Need help with licensing audits or Azure Local assessment?
Fireside Cloud Solutions can help you evaluate your licensing mix before July renewals and assess whether Azure Local is right for your organization's data sovereignty needs.
Contact Fireside Cloud Solutions →