Cloud Provider Challenging Microsoft With Windows Desktop Service

Next month, tuCloud -- through a newly created company called Desktops On Demand -- will launch a service in the U.S. that lets customers access a full hosted Windows 7 virtual desktop and Office apps from PCs and mobile devices. The desktop-as-a-service (DaaS), priced at $10 per user monthly, is similar to the one that cloud gaming vendor OnLive launched in January, which Microsoft earlier this month announced was violating its licensing rules.

Bule, for his part, doesn't think Microsoft has any intention of shutting down OnLive. To test this theory and gauge Microsoft's response, Desktops On Demand will mimic OnLive's desktop-as-a-service -- including the licensing violations.

[Related: Microsoft Partners Want Simpler VDI Licensing In Windows 8 ]

"OnLive is blatantly flouting the rules and Microsoft does nothing. Unless we do fight, we won’t have a business," Bule said in an interview. "Microsoft could file a billion dollar lawsuit against us tomorrow. We're ready for a fight."

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Even if this does come to pass, Desktop On Demand customers won't be left in the lurch, according to Bule. "We paid for infrastructure upfront, and if I am sued out of existence next month, there will be no disruption to service to our customers," he said.

Neither Microsoft nor OnLive could be reached for comment.

Desktops On Demand will use multi-tenant desktop virtualization technology from Desktone, a Chelmsford, Mass.-based vendor that has also been impacted by Microsoft's licensing policies.

Microsoft partners can sell hosted Windows 7 desktop-as-a-service using virtualization if the end customer has an existing licensing agreement with Microsoft. However, Microsoft does not allow hardware to be shared between customers, and so partners can't take advantage of multi-tenancy.

The rules are well known to Microsoft's hosting partners, many of whom were puzzled -- and irritated-- by OnLive's rollout in February of a desktop-as-a-service priced at $4.99 monthly.

The fact that Microsoft took a month to respond to what is clearly a violation of its terms is "offensive, a smoke screen and hogwash," said Bule, who questions whether Microsoft has sent OnLive a cease-and-desist order.

Steve Kaplan, vice president of data center virtualization at Presidio Networked Solutions, Greenbelt, Md., said Microsoft has been responsive to calls for change in the past, and he thinks the current pressure from partners could prompt further changes.

"The industry is getting increasingly vocal about Microsoft licensing policies and this is one example. Customers are unhappy about this," Kaplan said.

Microsoft partners do have the option of selling Windows and Office-as-a-service through Microsoft's Service Provider License Agreement (SPLA) using Windows Server and Remote Desktop Services (RDS). Cloud service provider Nivio uses this to offer a 10-hour desktop-as-a-service plan for students and teachers for $2 a month, and an unlimited plan for road warriors for $15 per month with clients for iOS, Android, Macs, and PCs.

However, Bule is no fan of this approach. "I cannot do what I do with that Windows Server model," he said. "I have nothing but contempt for that terminal server business -- it's an old model that restricts what you can do with desktops and application virtualization."

For all his unvarnished proclamations, Bule isn't actually positioning Desktops On Demand as a real company that is entering the cloud hosting space. He is merely trying to prove a point about how Microsoft licensing harms partners that want to sell its software.

"This new company we're forming is not going to be a serious business -- it is more like a spear to prick them with, or a stalking horse," Bule said.