Microsoft to Adapt Server Licensing for Virtualized Environments

by Alex Woodie

Microsoft this week announced sweeping changes to the way it charges for Windows Server components. Starting December 1, companies upgrading to Windows Server 2003 R2 Enterprise Edition will be able to run the operating system in up to four partitions on a single physical server. The company will also provide more flexibility in moving licensed Windows Server among different physical servers, and is looking to gain industry support for its Virtual Hard Disk format, which is available now with Virtual Server 2005.

One of the areas that Microsoft has taken a hit in the data center is the proliferation of Wintel servers and the desire of IT professionals to rein in those "server farms" through server consolidation projects. These server consolidation projects, which combine large SMP machines with virtualization technology from Microsoft and VMware--or even a completely different platform, like IBM's highly virtualized iSeries, which is capable of "watching over" dozens of connected Windows servers--enable organizations to simplify their Windows operations and cut costs.

Virtualization is a key technology for helping customers get off the "treadmill of complexity and cost that limits the value" of IT, says Andrew Lees, corporate vice president of the new Server and Tools unit at Microsoft. "Today we are announcing a new approach to software licensing, a virtualization and management technology road map, and broad industry support" to move the market toward virtualization and Microsoft's vision of "self-managing dynamic systems."

Starting with Windows Server 2003 R2 and Virtual Server 2005 R2, Microsoft will give customers new ways to use virtualization technology to simplify their operations and cut costs. The Enterprise Edition of Windows Server 2003 R2, which is in release candidate form and currently scheduled to ship by the end of the year, will include new "virtualization use rights" that enable users to run the operating system in up to four partitions on a single box. Microsoft currently allows the 32-bit Enterprise Edition of Windows Server 2003 to run on servers with up to eight processors and up to 32GB of memory (up to 1TB of memory for the Enterprise x64 Edition and Itanium 64-bit versions). Virtual Server 2005 R2, which is also undergoing beta testing and slated to ship by the end of the year, was upgraded from a service pack just over a month ago.

And when Windows Server "Longhorn" ships--an occurrence that is penciled in for 2007--customers buying the biggest Datacenter Edition will have no restrictions on the number of operating system instances supported on their SMP machines. With the Windows Server 2003 era of products, the 32-bit Datacenter Edition is cleared for use on machines equipped with eight to 64 processors, and up to 64GB of RAM (up to 1TB of memory for the Datacenter x64 Edition and Itanium 64-bit variants).

Of course, by the time Longhorn Server ships, all servers will be 64-bit capable, and the vast majority of X64 servers are expected to be equipped with multi-core processors from Intel and AMD. Microsoft has already said it won't charge customers double for dual-core processors, and will instead adopt "per socket" pricing (see "Microsoft Backs Intel, AMD on Dual-Core Licensing").

This one-two punch of relaxed multi-core licensing and favorable virtualization licensing terms from Microsoft should have a very positive impact on the pocketbooks of Windows users, particularly those at the high end, that have the biggest server consolidation projects, that will be the first to adopt the latest multi-core processors, and that license Enterprise and Datacenter editions of Windows Server products. Of course, Microsoft has been criticized for its pricing and licensing policies in the past--particularly for multi-year Software Assurance agreements, which has turned out to cost some customers more than if they had bought licenses outright--so perhaps these changes are more about not further alienating customers and about pacifying Software Assurance customers, than really building a happy and satisfied customers base. In any case, customers buying the new R2 products, and those that are on Software Assurance (and thus get the upgrade for free), will come out the better as a result.

In addition to the new virtualization use rights, Microsoft is making other changes to the licensing of Windows Server products. The company will no longer charge customers for every license of every Windows Server System product, even those that are inactive or stored for later use. With the changes Microsoft is putting into place, customers will only pay for the maximum number of instances running at any given time, enabling them to create and store unlimited instances of the products. These new terms are expected to have a positive impact on customers' backup and recovery processes.

Another factor benefiting backup and recovery processes is the new "portable licensing" Microsoft announced this week. Portable licensing will allow customers to deploy and run their Windows Server products on any physical server licensed for the product, which means they will be able to move active instances of Windows server products from one physical box to another without limitation, and without having to buy another license for the product, which is expected to benefit customers using blades and rack servers. (Customers will still have to buy a certain number of product licenses for the physical servers they want to run them on, and Microsoft will need to provide greater clarification of what this fully entails.)

Microsoft is also licensing its server products, including SQL Server, BizTalk Server, Internet Security Accelerator Server and others, by the number of virtual processors used, as opposed to actual processors. "Customers can now stack multiple virtual instances on a machine by licensing for the number of virtual processors being used, rather than for all of the physical processors on the server," says Brent Callinicos, vice president of worldwide licensing and pricing.

Finally, Microsoft is banging the drum for its Virtual Hard Disk (VHD) format, which it is pushing as a way to ensure the integrity of data in a virtualized environment, particularly for activities such as performing backups, running antivirus, applying patches, provisioning new boxes, and running virtual tape environments. Microsoft supports VHD with Virtual Server 2005 and Microsoft Virtual PC 2004), and it VHD will also be a key technology in Windows Server Longhorn, which will include a "hypervisor" layer and make virtualization a feature of the operating system instead of a separate product.

Microsoft wants its software and hardware partners to adopt the VHD format in their products, and to that end, the company published the specs for VHD in June 2005, and continues to make them available to third parties under a royalty-free license.