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Microsoft Simplifies Licensing for Virtual Environments - 11 Oct 2005

   In a bid to simplify licensing for OSs used in virtual machine (VM) environments, Microsoft yesterday announced dramatically less expensive licensing policies for future Windows Server versions. Microsoft hopes the new licensing will quell any remaining concerns enterprises have about operating VMs in product environments.

"Virtualization is one of the new technologies we've seen customers adopt to enable their move to more flexible systems," Bob Kelly, the general manager of infrastructure server marketing for the Windows Server Group at Microsoft, told me in a recent briefing. "It really helps customers drive up their usage of existing servers. Today, most existing servers see only 15 to 25 percent usage."

With VM environments, entire server or client OSs can be run inside a virtualized PC under a host OS. Microsoft Virtual Server 2005, which is Microsoft's server solution for virtualization, runs on the Windows Server platform and provides access to modern Windows versions as well as legacy systems such as Windows NT, Windows 9x, Windows 3.x, MS-DOS, and OS/2. Today, most VMs are used for testing purposes, but enterprises are increasingly turning to them for server consolidation scenarios in production environments.

The issue, until this announcement, was licensing: A copy of Windows Server running in a VM is as expensive from a licensing standpoint as a copy running on physical hardware. Under terms of the new licensing policies, however, customers who purchase Windows Server 2003, Enterprise Edition R2 (available later this year) will be able to run up to four more copies of that same OS inside VMs at no additional cost. "Today you'd pay $4000 for the hardware-based license plus $4000 per VM," Kelly told me. "Under the new terms, you'd pay $4000 total."

Longhorn Server Enterprise Edition, due in 2007, will offer the same VM licensing terms. But Microsoft also announced that customers who purchase Longhorn Server Datacenter Edition will have unlimited rights for VM licenses. Microsoft expects this change to establish Datacenter Edition as the go-to OS for enterprise VM deployments going forward.

This week's changes come on the heels of related moves Microsoft has made over the past year. The company has made its Virtual Hard Disk (VHD) VM format available to partners royalty-free and is working to improve its deployment and management products to better interoperate with VMs.

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