October 10, 2005 6:00 AM PDT

Microsoft takes stand on 'virtual' licensing

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of Microsoft's competitors in the operating system market, contacted on Friday, said they have made already made accommodations for virtualization.

Novell's policy allows customers to run "virtual images" for SuSE Linux Enterprise Server at no additional charge.

Scott Crenshaw, who leads product strategy for Red Hat Enterprise Linux, said the company offers a program designed to "significantly reduce the costs of deploying (Red Hat) Enterprise Linux in virtual environments." Crenshaw didn't offer additional details.

Doing the math
Under the new policy, Microsoft said Windows Server 2003 R2 Enterprise Edition, due by the end of the year, will include four virtual machine licenses for free. And in the Longhorn edition of Windows Server, which is due in 2007, Microsoft will allow customers to run an unlimited number of virtual machines for the price of the high-end Data Center edition.

Also, the policy changes will allow customers to reassign licenses from one machine to another, which is an important step to allow customers to provision software and hardware in a more fluid manner to meet changing workloads, Lees said.

Regardless of whether Microsoft's plan becomes the industry norm, it's clear that a change in licensing policies is needed. A recent Gartner survey found that 90 percent of its customers already use virtualization in some form and intend to do more. But the technique, meant to save customers on hardware costs, can inflate software license fees.

For example, a company may want to run an e-mail server and database application on a four-processor server. Currently, the software licensing cost for that arrangement would be the fee for the operating system plus two four-processor licenses for each application. If the company adds virtualization, the cost of that installation goes up. In addition to the application licenses, each virtual machine requires a different operating system license.

With the forthcoming policy, a customer could potentially lower cost by dedicating a virtual machine running on two processors to the e-mail server. Right now, a customer needs to pay for a four-processor license even if only two virtual processors are being used, Microsoft executives explained.

Initially, the new licensing plan will operate on the honor system. Microsoft will have no technical mechanism to track virtual machines and instead will rely on a customer's word, executives said.

Microsoft's virtualization strategy does not pose a significant financial risk to the company because it has set its policy before wide-scale adoption of the technology, said Gartner's Park.

New technologies that strive to make computing gear more efficiently have been creating havoc with software licenses. During the past year, infrastructure software providers have come to grips with licensing changes to accommodate multicore chips, which pack two or more processors on a single piece of silicon to raise performance without generating too much heat.

In October 2004, Microsoft set a policy of counting a multicore processor as one processor for licensing purposes, a move endorsed by chip makers but not by all software vendors.

Within several months, however, Microsoft's largest competitors in server software, including IBM, Oracle and BEA Systems, altered their policies as well.

Whether Microsoft's new virtualization policy will drive the industry is unclear. Lees said that Microsoft's policy is meant to address how customers are using virtualization today--mainly for consolidating several computing jobs on a single machine--as well as future scenarios. By allowing customers to move instances of Windows among different machines without having to purchase a new license for each instance, customers will be able to automatically provision servers over a network to meet changes in computing demand, Lees said.

In addition, over the next two years Microsoft will update its management tools to keep track of each virtual operating system on a machine. Having separate tools to monitor physical servers as well as virtual machines will raise the complexity and cost of running corporate data centers, he said.

Currently, Microsoft's main virtualization product is Windows Virtual Server. Use of the virtualization technique on Windows stands to be more widely used when it introduces a Windows "hypervisor" technology, a different technique that relies on a stripped version of Windows to host other virtual machines.

That hypervisor product will come out in the "wave" with Longhorn Windows Server, company executives said. Gartner's Bittman expects the hypervisor to be completed in 2008 or 2009. He noted that Microsoft is trying to catch up to market leader VMWare.

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Stand on Virtual Licensing
Quite a number of years ago Amdahl introduced MSF (Multi System Facility) and it wasn't taken to kindly by IBM, CA and other vendors who priced software on the number of CPU's physically installed rather than the Virtual Machine it was running on, though each had a unique serial number and CPU count that would have made licensing a simple matter. As a hardware vendor, Amdahl sought to keep customers' costs down, but this meant a reduction in licence charges levied by the software companies. We didn't see why a customer should pay the same for running a product on one CPU as another running it on 16 CPU's and getting 16 CPU's worth of performance. The widespread adoption of Virtualisation will surely shake up software licensing models, it places an enourmous amount of power in the hands of customers that they can use to good effect against the vendors. We have not seen the new pricing model and it needs to be scrutinised carefully by customers to ensure it reflects a fair assessment of their useage and they must be willing to kick up holy dust at any sleight of hand they detect. Customers should regard the software vendors as the enemies in a turf war and hence suspect, they have the collective power -- the dog is about to wag the tail for the first time perhaps.
Posted by sidboyce (8 comments )
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SPof issues?
I wrote a bit here: <a class="jive-link-external" href="http://www.supergeekblog.com/?p=69" target="_newWindow">http://www.supergeekblog.com/?p=69</a> after reading this... but thought a comment here might get a few ideas from people. The model change is good... but more people shifting to virtual servers is just asking for single point of failure issues right?
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