Thin Clients Get Microsoft’s Approval — for Some Users

New licenses limited to SA customers

Once an avowed opponent of thin clients, Microsoft Corp. has made an about-face in recent years. And last week, the company brought its affair with network computing into the open, revising two previously ambiguous software licenses related to the streaming of Windows from servers to thin-client hardware.

But the changes favor subscribers to Microsoft’s Software Assurance maintenance and upgrade program, and some IT managers and Microsoft business partners said the revised licenses could add significant costs for non-SA users and smaller organizations. The potential new costs could be enough to make desktop virtualization financially unviable for some of those users.

“If they went after us, we’d probably have to drop the [streaming] product,” said Lee Steinsdoerfer, technology director at Zion-Benton Township High School in Zion, Ill. The school is replacing its 700 desktop PCs with thin clients — essentially PCs without hard drives. End users will get Windows and their applications streamed to them from five central servers running software from Ardence Inc.

Technically, all Microsoft customers who stream Windows are supposed to buy a retail operating system license for every client device that is used to access the OS. But IT managers and analysts said the software vendor hasn’t enforced that requirement.

Last week, though, Microsoft declared that only organizations with SA contracts would be able to run Windows Vista Enterprise on thin clients — or “diskless PCs,” as the software vendor calls them — at no extra cost beyond the standard Vista license fee.

Microsoft also said that only SA subscribers would be eligible for a new annual fee license called Windows Vista Enterprise Centralized Desktop. VECD lets companies deploy Vista in virtual machines on servers for use by both PCs and thin clients (see box).

Steinsdoerfer said Zion-Benton is too cash-strapped to subscribe to SA, which under a typical three-year contract tacks on charges amounting to 87% of the cost of Microsoft’s desktop products and 75% of the cost of its server software.

And Steinsdoerfer is no fan of the idea of paying for additional Windows licenses. He noted that by simply installing hard drives on its thin clients, the school could legally run Windows at a lower cost than it might have to pay to continue streaming the operating system. “Why should Microsoft charge us more just because we’re running Windows off a server?” he said.

Move to Diskless PCs

The government of Oregon’s Lane County is moving 1,500 users to diskless PCs that will have Windows XP and all of their applications streamed to them from virtual machines hosted on central servers.

As part of that move, the county is negotiating its first SA agreement with Microsoft, said Brad Carpenter, a senior information systems analyst for the county. Because of the SA contract, the move to thin clients will be “almost a wash” cost-wise, Carpenter said.

Third-party vendors such as Waltham, Mass.-based Ardence, which was acquired in January by Citrix Systems Inc., and Austin-based ClearCube Technology Inc. have been offering technology for streaming Windows to client devices for several years.

But until now, “there was no licensing explicitly created by Microsoft to enable those scenarios,” said Scott Woodgate, a director in the company’s Windows business group. Woodgate said the new licenses are meant to make it easier to deploy streaming or virtualized infrastructures, although he added that Microsoft expects such deployments to remain “niche” applications appealing primarily to banks and other large customers.

Asked whether it plans to crack down on non-SA customers that stream Windows to thin clients, Microsoft declined to comment directly. The company said in a statement that it encourages users to take advantage of diskless PCs or virtual systems, “assuming that they have rights to Windows Vista Enterprise for each licensed device.”

Brian Madden, an independent analyst in Silver Spring, Md., said the changes made by Microsoft are “a modernization of [its] license agreements so that what used to be a ‘don’t ask, don’t tell’ situation is now officially allowed.”

But Madden and other analysts said Microsoft is pushing hard to get users to sign up for Software Assurance.

“SA is becoming a handy way for Microsoft to monetize,” said Paul DeGroot, an analyst at Directions on Microsoft. DeGroot estimated that Microsoft garners $1 billion a year solely from companies subscribing to SA for Windows, despite the fact that he thinks customers get “very little value” for their money.

Server-Based Windows Options

Terminal Server:

•  Microsoft software that lets users access applications hosted centrally on a system running Windows Server.

•  Requires a Windows Server Client Access License for each device or user, plus a separate Terminal Server CAL for running Windows sessions. Vista Enterprise Centralized Desktop (VECD):

•  A new Microsoft license that lets companies host Windows in virtual machines on servers that can be accessed by full-fledged PCs or thin clients.

•  Available only to customers with Software Assurance contracts; Microsoft is charging an undisclosed annual license fee. Windows streaming via third-party software:

•  Thin-client approach built around software streaming technology from vendors such as Ardence and ClearCube.

•  Microsofts modified Vista Enterprise license lets Software Assurance customers stream OS to thin clients at no extra cost; others must buy OS licenses for each device used.
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