Microsoft Revamps Licensing For Virtual Era

Microsoft said that on Dec. 1, it will enact new licensing terms for virtual "instances" running on Windows Server 2003 R2, due to ship by end of the year, and for the Windows Longhorn server upgrade due out in 2007. The Windows Longhorn Server DataCenter Edition, for example, will support an unlimited number of virtual machines.

In the more immediate future, Microsoft will let customers run up to four virtual machines on Windows Server 2005 R2 Enterprise Edition on one physical server at no additional cost, along with more generous licensing terms for storing inactive virtual servers and more flexible portable and per-processor workloads.

Under the new rule, customers only pay for active virtual machines running at any given time. Microsoft eliminated a current requirement that forced customers to license every "inactive or stored" virtual machine. The change gives customers the freedom to create and store virtual machines at no cost for testing or other specific purposes, such as backup and recovery.

The Redmond, Wash.-based software giant also altered its portable licensing terms so customers can move virtual machines from one server to another without limitation, provided that the physical server is licensed for the product. For instance, a customer could move a SQL Server 2005 workload from one physical server at no cost if the target server is licensed for that application.

In addition, Microsoft plans to give customers more flexibility when running multiple instances of a server that is licensed per processor, such as SQL Server 2005 or BizTalk, on one machine. With this policy, customers and partners can stack multiple virtual "instances" of these servers on a single machine by licensing the number of virtual processors being used, rather than physical processors, Microsoft said.

Virtualization technology, which VMware pioneered on the Intel architecture, has been widely embraced as a way to consolidate servers, ease management costs and automate resources in a data center environment. With the new licensing terms for virtual servers and workloads, Microsoft is making a big change in the way it does business, according to one ISV partner.

"These steps are the first real signs that Microsoft is taking virtualization seriously, and one should not underestimate the effort it has taken them to change their licensing conditions," said David Crosbie, CEO of Leostream, a Waltham, Mass.-based ISV. "This is a huge step and a huge change in mind-set. A major reason for the price of the [Windows] OS is that it can run a lot of applications. You can have a copy of Windows 2003 that provides Active Directory, Exchange, DNS, DHCP, Web services, file and print serving. Microsoft works out [to be] more expensive than Linux once you start to split things up."

While virtualization software has helped simplify server management, the technology has clouded the issue of licensing, according to Bob Kelly, general manager of server infrastructure at Microsoft.

"Virtualization is nice because it helps reduce server sprawl, but it has caused confusion in how to license in a virtual world,” Kelly said. “Today it's done at the install, and [the license] is bound to the physical device. But when you move to a virtual world, how do you count if customers have a blend of both physical and virtual machines? They need to manage both and enable interoperability in a virtual world and licensing models, so you can consume them in an easy-to-understand way."

To drive its Virtual Hard Disk (VHD) format as an industry standard, Microsoft also announced that leading ISVs such as BMC Software, Quest Software, Surgient, Leostream and XenSource plan to build solutions integrate with the upcoming Microsoft Virtual Server 2005 R2 or support the VHD format.

VMWare didn&t comment on whether it will support VHD. This week, Leostream plans to introduce Leostream P>V Direct 2.0 , a product that directly converts physical servers into Microsoft and VMware virtual machines. P>V Direct 2.0 supports Windows NT4, XP, 2003/2000, Microsoft&s new Virtual Server 2005 R2 and VMware.

VHD, which Microsoft began licensing royalty-free last spring, is designed to give the industry a standard way of storing virtual data and customers a way to migrate virtual machines from the current Windows platform to the Windows server version that fully integrates hypervisor technology. Microsoft executives said the hypervisor technology--originally slated to be included in the Longhorn server--would be released in an interim server after Longhorn ships. But Microsoft said it won't be delayed until the Windows server version beyond that, which is code-named Blackcomb.

Kelly said Microsoft aims to build virtualization technology that is automated, flexible, adaptable and able to dynamically assign resources on the fly. Still, he acknowledged that it will take some time for that vision to materialize into products. "There's a lot of work that has to be done to get there," Kelly noted.

Meanwhile, Microsoft is pledging support for Intel Virtualization Technology and Advanced Micro Devices& Pacifica virtualization technology, which is expected to be incorporated into server processors that ship during the first half of 2006. However, Windows Server 2003 R2 won&t exploit those hooks initially, according to Microsoft.