Microsoft to unveil new licensing policies for virtual machines

Virtualization industry observers expect Microsoft to eliminate a licensing restriction that has hampered the mobility of virtual servers, perhaps as soon as next week.

Under current Microsoft rules, software running on a virtual machine is licensed based on the physical server. This can be problematic because of technologies such as VMware's VMotion, which can move virtual machines from one physical server to another without causing downtime.

Microsoft considers a VMotion move a license transfer, and prevents customers from making such a transfer more than once every 90 days.

"You may reassign a software license, but not on a short-term basis (i.e., not within 90 days of the last assignment)," Microsoft says in a licensing policy document for Windows Server 2003.

This 90-day restriction also applies to SQL Server 2005 and Exchange Server 2007.

Click to see: A chart detailin the problem with virtual license

"Technically, the virtual machine would have to remain on the same physical machine for three months," says Burton Group analyst Chris Wolf, who has written extensively about licensing on virtual servers and urges vendors to lift such restrictions.

In an interview last month, Wolf predicted that Microsoft would respond to customer concerns and eliminate the 90-day restriction, and instead tie licenses to virtual machines rather than physical ones. "Within a few months we're going to see those changes," he said. "I believe the 90-day restriction will go away."

It could happen as soon as next Tuesday. In an interview with Network World last month, Patrick O'Rourke, group product manager at Microsoft, discussed the 90-day restriction and said Microsoft is considering licensing changes that would give customers more flexibility in reassigning virtual machines.

Just this week, a Microsoft spokesperson said the company will announce licensing changes next Tuesday.

"As server virtualization becomes more mainstream, Microsoft will be announcing new licensing and support policies to help customers make their data centers and enterprise IT more dynamic on August 19," Microsoft said.

The exact changes haven't been revealed. Lifting the 90-day restriction would give Microsoft customers an ideal set of licensing policies for virtual environments, according to a January report written by Wolf titled "Virtualization Licensing and Support Lethargy: Curing the Disease that Stalls Virtualization Adoption."

Microsoft already supports multiple virtualization platforms and gives customers several licensing options tailored both for small businesses and large enterprises.

"Allowing Standard Edition Windows Server OS licenses to be assigned directly to a VM and move with a VM without restriction is all that is needed for Microsoft to offer the most nearly ideal licensing terms," Wolf wrote.

Most vendors are making a good-faith effort to offer fair licensing terms, says analyst Charles King of Pund-IT Research. "Vendors are working hard to come up with schemas that work well and are fair to them and the end customer," he says.

But adapting licensing to data centers where virtual machines can be created in an instant and moved just as quickly is challenging. Multi-core processors add to the complexity. Vendors are still grappling with the question of whether to charge license fees for each server, core or socket, or use some other calculation to determine the value of software. Virtualization, meanwhile, lets IT managers operate multiple virtual servers on a single core. (Compare server products.)  

In virtualized data centers designed for high availability, "you've got the ability to spin up additional virtual machines as your processing demands increase," King says. "The difficulty with software licensing is how you keep track of how many virtual machines, how many applications, or how many iterations of the operating system you're running at any time. … It's an interesting can of worms."

Customers often devise workarounds to avoid punitive licensing terms. Robert Wicks, senior AIX/Linux systems administrator at Rollins, an Atlanta-based pest-control company, says a couple small software vendors charge Rollins for all the cores in a server even if the application is only using some of them. The solution: run the software on older hardware with fewer processors.

"It's very inconvenient. We'll probably have to address the issue at some point," Wicks says.

Such problems occur when vendors don't update their policies to reflect the realities of server virtualization, Wolf says.
"There are still vendors who have no clearly defined licensing policy for virtual environments," he says. "The biggest offender is Oracle."

Say you're running Oracle's database on a four-socket server with four cores each, 16 cores in all. Even if you're only running the database on a few cores, Oracle will charge you for all 16.

"You have to pay for all available CPUs on a physical server," Wolf says. "That discourages organizations from virtualizing Oracle applications."

Oracle declined requests for comment from Network World.

Ari Kaplan, president of the Independent Oracle Users Group, doubts this licensing issue would harm customers. Most people virtualizing an Oracle database will use all the CPUs available, anyway, he says.

"It seems more like a theoretical case," Kaplan says.

Oracle user Mitch Dysart, the IT director of operations and chief technology architect at Ohio State University, says he's avoided any pricing penalties with a single license covering his whole deployment.

"We have an enterprise site license for Oracle, so it's not really an issue," says Dysart, who makes extensive use of VMware's hypervisor.

Things can quickly get confusing if your vendor charges for each instance of an application, says Marty Kacin, CTO and co-founder of Kace, which offers management tools that keep track of software running on physical and virtual machines.
"As you start to deploy virtual machines … you are deploying more operating systems that need to be licensed and metered," Kacin says. "Every time you tell your systems management tool that you want to spin up a new virtual machine, all of a sudden you're deploying operating system and application licenses to people whether you like it or not."

VMware user Jack Story, the CTO of Infocrossing, is hoping application vendors come up with simpler licensing models.
"It would be really nice if we could just have a very simple licensing model. That's not the case today," he says.

Microsoft's announcement next week could help in this regard. Wolf, for one, is optimistic that licensing problems will all be sorted out, though it may take a while.