Does virtualization mean it's time to change Microsoft license models?

By Microsoft Subnet on Tue, 05/27/08 - 7:37pm.

With the introduction of Windows Server 2008, Microsoft improved its software licensing options for virtualized servers. Still license fees for virtual servers, as well as support of software running on them, remain big areas of contention for Microsoft customers. But customers will be hard pressed to find loopholes in Microsoft's terms, suggests Forrester analyst Christopher Voce at Forrester’s IT Forum in Las Vegas Friday. However, customers are creatively trying to circumvent the virtualization issue when they need product support, and not just with Microsoft products, according to a recent Burton Group report. It said customers of numerous software vendors deal with support limitations by “accidentally” failing to disclose that an application is running on a virtual machine, or by cloning virtual machines to a physical server before calling support.

Customers are reporting that they are able to get more favorable licensing terms when they are not trying to license Microsoft operating systems to run on VMware or Citrix. In other words, these customers say Microsoft is willing to look the other way (fiscally speaking) when counting up instances of its operating systems running on its own hypervisor, but not when those instances are running on competitors' products. While this may not be the kindest way to treat one's customers, it is in some ways, to be expected. That said, Microsoft obviously realizes that virtualization is also to be expected with server software, and it isn't just its own brand of hypervisor that will be deployed. The Windows Server 2008 standard license grants one virtual machine per license (see Microsoft's WS2008 licensing pages). That may be laughable, but the standard license is really geared toward the SMB. The enterprise license allows four virtual machines per license and the data center model is based on the truly archaic practice of counting processors (thanks to multicore CPUs, that can be hard to do). However, it allows unlimited instances of virtual servers.

Microsoft might be among the friendliest old-school software companies in its approach to virtualization, the Burton Group reports. But the issue is broader than that. It is time for these long-lived software companies to let go of revenue models built in the 1980's and 1990's and make a success out of Software as a Service. The enormous profit maker, otherwise known as Microsoft, must move into new revenues models cautiously, for sure. Still, the idea of charging for the software but doing basic support for free is problematic when you can no longer count the number of servers or processors. The model where the software is give3n away but service and support costs money is a logical evolution.

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See blogger Glenn Weadock: Windows Server 2008