I wanted to take a moment to update everyone on some work I have been doing on behalf of multiple Burton Group clients.

In early December, one of our clients was on Microsoft’s web site and read “Your Ultimate Quick Reference Resource for Licensing and Pricing.” The guide summarizes OS and application licensing scenarios in a relatively brief 39 pages (compared to the 104 page Product Use Rights, which has served as the definitive reference for Microsoft licensing policy).

Now back to the problem. On page 11 of “Your Ultimate Quick Reference Resource for Licensing and Pricing” there is a FAQ with the following question and answer:

Q: If I move an instance of Windows 2003 to run as a virtual instance on
a server with Windows Server 2008 Enterprise running in the physical
operating system environment. Can I use Windows Server 2003 CALs to
access the virtual instance of Windows Server 2003?

A: No. Because the virtual instance of Windows Server 2003 runs on a
Windows Server 2008 license, the user or device accessing the virtual
instance of Windows Server 2003 needs a Windows Server 2008 CAL.

Information in the January 2009 PUR contradicts this statement. The PUR (on page 30) states:

Your CALs permit access to your instances of earlier versions, but not later versions, of the server software…

However, on page 30 of the January 2009 PUR there’s another catch:

You must acquire and assign a CAL to each device or user that accesses your instances of the server software directly or indirectly.

Note that when I started the original inquiry, I was referring to the same page on the October 2008 PUR. I’m listing the January 2009 document because it is the most recent and there are no changes on page 30 of the two versions. Now before your head starts to completely spin, let me summarize the current problem.

The only time organizations would need Windows 2008 CALs to access Windows 2003 VMs would be if those VMs were running on Hyper-V (since Hyper-V is the only hypervisor that runs on Windows Server 2008). That scenario would be considered indirect access to Windows Server 2008. Organizations running any hypervisor other than Hyper-V could use their existing CALs and would not have to upgrade to Windows Server 2008 CALs. This also means that a cost comparison for Hyper-V will need to potentially include a CAL upgrade, something that would not be required for other hypervisors. As you can see, this policy in turn negatively impacts Microsoft in terms of Hyper-V competitive price differentiation. VMware also picked up on this issue and blogged about it here, and Microsoft’s James O’Neill responded with this post.

Now here’s the (potential) good news. Last week Microsoft gave me the following statement:

Microsoft is reviewing the current Windows Server OS licensing policy pertaining to CAL requirements for accessing Windows Server OS instances in Virtualized environments, and expects to have a policy update to customers by late January.

A licensing policy update is now imminent and will be published within weeks. Of course, the news is only good if it will benefit enterprises running virtualization software, regardless of vendor. Here is what I am hoping to see in the licensing policy update:

• CAL requirements for “indirect access to Windows 2008″ will be lifted. So organizations will only need CALs for Windows guest OSs and the applications that run within them.
• Current Microsoft OS and application licensing policy that requires licenses to be assigned to physical hosts will be lifted.

Single instance server or application licenses should simply reside in a VM guest OS and move with the VM. Ties to physical hardware make license management all but impossible in any type of shared cloud infrastructure. Service providers feel that they could host Microsoft VMs in their “cloud” and allow organizations to move those VMs between their data centers and the cloud more easily if licenses did not have to be assigned to physical servers. I blogged about this particular issue last August. Microsoft is promoting a cloud vision, but so far has not lifted license restrictions that make it possible for enterprises to move workloads to the cloud in the first place. I’ve already heard that the “restrictions don’t need to be lifted because there is currently no demand for this type of service.” However, service providers have told me that they can’t build demand until the license mobility restrictions are lifted.

Microsoft has taken a number of positive steps to add licensing clarity for virtual environments, and goes to great lengths to explain how licensing should be applied to a variety of virtualization products and architectures. Their server virtualization validation program also makes it easy for organizations to determine the hypervisors that Microsoft supports. Outside of IBM and HP, there aren’t many other vendors that support more virtualization platforms than Microsoft.

Microsoft is heading in the right direction, and within weeks we will learn of new revisions to their licensing policy. Like with their previous update, I plan to post my interpretation of the revisions online shortly after they are released to the public. Microsoft – if you can’t already tell, I (along with many of our clients) have high expectations for your next licensing policy update.

Stay tuned.

Note: Originally posted to Burton Group’s Data Center Strategies blog.