Microsoft dumps Vista virtualization limits

Mac users benefit, say analysts, from change to Vista Home Basic, Premium EULAs

Microsoft Corp. on Monday dropped its prohibition on running the least-expensive versions of Windows Vista in virtual machines, doubling the choices for Macintosh owners who run the rival operating system in VMware Inc.'s Fusion or Parallels Inc.'s Parallels.

Beginning immediately, Vista Home Basic and Vista Home Premium can be run in a virtualized environment, Microsoft said Monday. The pair are the cheapest editions of the operating system available at retail, selling in full versions for $199 and $239, respectively. Previously, Microsoft only allowed Vista Business ($299) and Vista Ultimate ($399) to be installed in a virtual machine (VM).

In June 2007, Microsoft nearly pulled the same trigger -- it actually briefed reporters before backtracking -- but did not say why it had changed its mind. At the time, it only issued a terse statement through its public relations company: "Microsoft has reassessed the Windows virtualization policy and decided that we will maintain the original policy announced last fall." Seven months ago, however, some analysts pegged problems with Vista's digital rights management (DRM) software for the hesitation.

The only change Microsoft needed to make was to the end-user licensing agreements (EULA) of Vista Home Basic and Vista Home Premium; there has never been a technical barrier to virtualizing either version on the Mac or any other platform.

Analysts applauded the decision on several levels.

It was practical, for one thing, argued Chris Swenson, an analyst at The NPD Group Inc. "It's harder and harder to find a copy of Windows XP at retail, so for those Mac users who are buying Fusion or Parallels, they really have to buy Vista." And when it comes to Vista, Home Premium is the "sweet spot," Swenson added.

In fact, he's convinced that the success of Apple Inc.'s Mac and the VM applications from Parallels and VMware played a part in Microsoft's decision. "If you're Microsoft and seeing a move to another platform, you should make it easier for people to use Windows, not harder. You want to keep customers engaged with Windows, with Vista in particular. You don't want to lose customers forever [when they buy a Mac]."

Michael Gartenberg, an analyst at JupiterResearch LLC, echoed Swenson's take. "While virtualization at the desktop for consumers isn't a big issue at the moment, it will likely become more important over time, especially as Mac OS X gains consumer momentum," he said. "Seems like Microsoft wants to make sure that if there is a consumer desire to run Windows, Microsoft wants to allow it no matter the platform used to host it."

Paul DeGroot, an analyst at Directions on Microsoft, however, saw a slightly different motivation for the move. "It appears that Microsoft has recognized that their restrictions on VMs are likely to have little impact on the competition, and probably hurt it and its market share more than anyone else," said DeGroot in an e-mail. "They're really trying to make the case that they have the most complete virtualization story, and it's difficult to do that if you keep imposing restrictions and making up lame excuses, such as, 'No one wants to do this, so we're prohibiting it,' to explain the restrictions."

In the past, Microsoft has cited both a lack of interest in virtualizing Vista and potential security problems as reasons for not allowing Home Basic and Home Premium to run in a VM.

According to Ben Rudolph, Parallels' director of communications, the change is a win for Microsoft, his company and Mac users. "This is a good move for Microsoft because it gives their current customers a way to move to Vista. Kicking the virtual tires is pretty attractive. But for non-Microsoft customers, it's even bigger," he said. "It's an excellent way for them to reach that other 6% of the desktop market and gives users some incentive to stick with Windows."

The decision to allow Vista Home Premium in a VM is especially welcome, Rudolph noted, claiming that Parallels users asked about running that version of Vista more than any other. "They wanted to use Home Premium because it was the sweet-spot operating system. It had what they needed, and it didn't cost $400 [like Vista Ultimate does]."

While representatives from Microsoft were not available to explain why the company had a change of heart, Rudolph had his suspicions. "Last year, they told us the decision [not to allow virtualization] was not final, and I think they got an overwhelming response from customers and partners that they should rethink," he said.

Microsoft has posted a EULA supplement that applies to the four retail versions of Vista and spells out the change. "Instead of using the software directly on the licensed device, you may install and use the software within only one virtual (or otherwise emulated) hardware system on the licensed device," the notice said.

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