Entra ID — Microsoft Entra ID

Microsoft Entra ID is the primary cloud-based identity and access management (IAM) service provided by Microsoft. It serves as the central directory for authenticating users and securing access to resources, including Microsoft 365, the Azure portal, and thousands of third-party Software-as-a-Service (SaaS) applications. Formally known as Azure Active Directory (Azure AD) until its rebranding in late 2023, Entra ID is the foundation of identity security in the Microsoft ecosystem.

Core Capabilities and Licensing Tiers

Entra ID is licensed primarily through a per-user subscription model, organized into distinct functional tiers:

• Entra ID Free: Included with any subscription to a commercial online service (e.g., Azure, Dynamics 365, Intune). It supports user management, basic reporting, and Single Sign-On (SSO) for up to 10 apps per user.
• Entra ID P1 (formerly Azure AD Premium P1): Adds enterprise-level features such as Conditional Access, which allows organizations to enforce security policies based on location or device state. It also includes Group-based licensing and Passwordless authentication.
• Entra ID P2 (formerly Azure AD Premium P2): Includes all P1 features plus advanced security tools like Identity Protection (risk-based conditional access) and Privileged Identity Management (PIM) for just-in-time administrative access.
• Entra ID Governance: A specialized add-on for P1 or P2 customers that provides advanced lifecycle management and entitlement management capabilities.

Common Misunderstandings

One of the most frequent points of confusion is the relationship between Entra ID and Windows Server Active Directory (AD). Unlike traditional AD, Entra ID is not a cloud-hosted version of a domain controller; it uses different protocols (REST APIs, SAML, OIDC) and does not natively support Group Policy Objects (GPOs) or Kerberos in the traditional sense. Another common misconception involves OEM licensing; while Windows Pro hardware includes the ability to join Entra ID, the Entra ID P1 or P2 service plans themselves are never sold as OEM products and must be acquired through volume licensing or monthly subscriptions.

Licensing Agreements and Related Terms

On a Microsoft Customer Agreement (MCA) or Enterprise Agreement (EA) quote, Entra ID usually appears as a standalone SKU or as a component of a larger suite. It is bundled as follows:

• Microsoft 365 Business Premium: Includes Entra ID P1.
• Microsoft 365 E3: Includes Entra ID P1.
• Microsoft 365 E5 / F5 Security: Includes Entra ID P2.

Related terms include Entra Domain Services (a managed service for legacy protocol support), External ID (for B2B/B2C scenarios), and Conditional Access (the primary policy engine within the P1/P2 tiers).

Practical Buying Note

When purchasing, remember that Entra ID is a user-based license. Every human user who benefits from the premium features (such as PIM or Conditional Access) must be assigned a license. While Microsoft does not technically "hard block" all premium features if you are under-licensed, failing to match your user count to your license count creates a significant compliance risk during a vendor audit. Organizations often find it more cost-effective to purchase a Microsoft 365 E3 or E5 bundle rather than buying Entra ID P1 or P2 as a standalone add-on.

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