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Microsoft does a virtual 180 -- no, wait, a 360

On verge of dumping disliked Vista virtualization restrictions, company changes mind

By Eric Lai
June 20, 2007 12:00 PM ET

Computerworld - After briefing reporters and analysts about a plan to cut controversial restrictions on how consumers can virtualize its new Vista operating system, Microsoft Corp. on Tuesday night pulled a second 180 at the last moment, saying it would stick with its current policy.

Using desktop virtualization software such as VMware Inc.'s VMplayer, Microsoft's Virtual PC, or Parallels Inc.'s Desktop for the Mac, users can create virtual copies of a PC, including the hardware, operating system and applications, that can run on top of another operating system or be transported to another machine. In the case of Parallels, that can even mean Windows XP or Vista-based virtual machines, or VMs, that run on top of Macs using Intel processors.

Microsoft planned to let consumers create VMs using retail versions of Vista Home Basic and Vista Home Premium. Those cost $199 and $239, respectively.

Microsoft's contracts, known as End User Licensing Agreements (EULAs), only allow full retail versions of Vista Business or Vista Ultimate to be run as virtual guests of a host PC. Those cost $299 and $399, respectively.

This simple change in Microsoft's license -- there was no technical limitation preventing knowledgeable users from virtualizing retail versions of Home Basic or Home Premium -- would have saved customers at least $60 and up to $200.

The allure of virtualized Vista

Besides boosting flagging perceptions of Microsoft's overall virtualization strategy, the move would have made Vista virtualization much more attractive to a key and growing segment: Intel Mac owners who want to run Windows software.

"This is aimed at virtualization enthusiasts, and that includes consumers wanting to run Windows on Mac hardware, absolutely," said Scott Woodgate, a director in the Windows Vista team, in an interview on Monday before Redmond's reversal.

According to Chris Swenson, software analyst for NPD Group Inc., almost one in ten PCs sold today at U.S. retail stores is a Mac.

Renton, Wash.-based Parallels has sold half a million copies of its software that lets Intel Mac owners boot up OS X but also run Windows XP or Vista applications.

"I would anticipate after this announcement, the number of people running Vista in virtual machines will explode," said Ben Rudolph, director of communications for Parallels, before Microsoft's about-face.

Reached on Tuesday night after Microsoft's turnabout, Rudolph said "we're obviously disappointed by Microsoft's decision... but this is ultimately Microsoft's decision. It's their call on how they license their own software."

"What we will do -- which is easy to do because we are just down the road from Redmond -- is continue talking to them, keep advocating the enablement of virtualization, keep the issue alive," he said.

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