Microsoft Changes Virtualization Licensing Rules

• By Keith Ward
• 08/20/08

Microsoft has made substantial changes to its virtualization licensing program, changes that will lower the cost of using virtualization for many customers.

In a document released Monday, Microsoft relented on a key issue that should ease the financial burden of virtualization: the 90-day license transfer restriction. Under that rule, a program, such as Exchange Server, could be moved from one physical server to another, but could not be moved again for 90 days without paying an additional license fee for the new host server.

In effect, it meant that companies with two or more servers could not move Microsoft products to different servers without buying a license for each server. With virtualization, programs are moved around frequently, so the 90-day restriction was a stumbling block to adoption of Microsoft virtualization technologies.

Under the new program, licenses are able to traverse multiple servers, instead of individual ones. Microsoft explains in its document (all emphasis in original):

"Effectively, the changes mean instead of counting instances or processors and licensing by server, you are able to count instances or processors and license by server farm."

"Instances" means single copies of a program. With that block removed, companies may be more willing to try Hyper-V, Microsoft's new hypervisor that was released to the public in June.

The changes aren't all-encompassing, however. For example, the new rules only affect customers with Volume License agreements; since those agreements are for companies that have a minimum of five copies of a product, many small and medium-sized businesses, that don't need multiple copies, can't take advantage.

There are other restrictions, as Microsoft details:

"This change does not apply to software licenses for the Windows Server operating system, Client Access Licenses (CALs), or Management Licenses (MLs)."

This means that if you want virtualized instances of Windows Server 2003 or Windows Server 2008, for instance, you will likely have to pay for each server that may host the OS, assuming that the OS may move around.

Chris Wolf, a Burton Group analyst and columnist for Virtualization Review magazine, said in a blog entry that the changes are good, but they could have gone even further:

"Microsoft - great move today. I think many enterprises will appreciate the application licensing flexibility that your policy change has provided. Still, let's not forget about the small IT shops that do not have volume licenses ... why restrict server OS mobility? Lifting the 90 day licensing transfer restriction across all product lines is simply the right thing to do."

The licensing changes go into effect Sept. 1.