Virtualization can't help much with Microsoft software-licensing fees, analysts say

For all the flexibility that server virtualization affords today's IT departments, there's one type of flexibility IT managers would love to have but aren't likely to get: the ability to save money on Microsoft Corp. software licenses.

Even when carving a physical server into multiple virtual machines, users probably won't find any way to circumvent the licensing terms set by Microsoft for software running on virtual machines, Forrester Research Inc. analyst Christopher Voce said at his firm's IT Forum in Las Vegas Friday.

"If you are getting any benefit from Microsoft's software, you need to have a license, whether that benefit is for physical machines or virtual machines," Voce said in a session titled "Microsoft Licensing in a Virtual World."

"You cannot engineer your way around licensing requirements. You can't use the technology as a way to cut corners around licensing."

Some customers are trying to cut corners, though. A recent Burton Group report said customers of numerous software vendors deal with support limitations by "accidentally" failing to disclose that an application is running on a virtual machine, or by cloning virtual machines to a physical server before calling support. (Compare server products.)

One question is whether Microsoft intends to use licensing policies to steer customers away from VMware Inc.'s hypervisor and onto its own upcoming server virtualization software, known as Hyper-V. Two audience members who are engaged in desktop virtualization initiatives reported that Microsoft would charge them extra for operating system licenses if they used VMware or Citrix Systems Inc. tools rather than Microsoft's own desktop virtualization software.

While Voce said there's no way to "engineer" your way around licensing requirements, there are ways to save money by carefully evaluating Microsoft's terms.

Microsoft offers a few licensing models for Windows Server 2008. The standard model, Voce said, grants one virtual machine per license. The enterprise model allows four virtual machines per license. The data center model prices are based on the number of processors.

Data center licenses cost less than the alternatives when you're running 10 to 20 virtual machines per server, Forrester has found.

Voce advised customers to plan for Windows Server licensing at the same time they devise virtualization and consolidation plans. Too often, he said, the people negotiating software licenses aren't the same ones implementing server virtualization. When negotiating new licenses for virtual servers, you should push Microsoft for more favorable trade-up conditions, he said.

Microsoft's Software Assurance, a maintenance program that allows users to spread payments out over several years and get free upgrades, can offer some good terms for virtualized environments, Voce said. With desktop virtualization, Software Assurance can allow a user to work at home or in the office without needing an extra license, he said.

Despite customer frustration, Microsoft might be among the friendlier companies when it comes to virtualization licensing terms. The recent report by the Burton Group said Microsoft is one of five management application vendors that provide virtualization-friendly licensing, along with Hewlett-Packard Co., Opsware Inc., Sun Microsystems Inc. and Symantec Corp.. However, Burton also said Microsoft does a poor job in licensing virtual instances of client/server and middleware products. Microsoft customers who use Exchange Server 2007 and SQL Server 2005 are allowed to move virtual machines between physical servers only once per 90 days, Burton noted.

For Windows Server 2003, Burton said Microsoft generally offers good licensing terms, except when it comes to moving a virtual machine from one physical server to another. This requires a license transfer.

Burton analysts argued that punitive licensing terms may stall adoption of server virtualization. Punitive terms found across the marketplace range from supporting only certain hypervisors to tying licenses to specific hardware components or penalizing customers for maintaining offline copies of virtual machines for disaster-recovery purposes.

James Norwood, vice president of product marketing at Epicor Software Corp. in Irvine, Calif., notes that customers are asking for better licensing terms on virtual servers.

"Our customers are asking for it," he said. "We are a Microsoft shop, but all our customers are heavily invested in VMware. It's a challenge."

Norwood was speaking at a Forrester session that covered several topics related to software licensing. The panel also featured Microsoft's general manager of licensing and pricing, Jason Kap, who said vendors want to prevent getting short-changed when customers move to virtualization. Applications still have value to the customer, even if they are running on a virtual machine rather than "on metal," he said.

This story, "Virtualization can't help much with Microsoft software-licensing fees, analysts say" was originally published by Network World.

Copyright © 2008 IDG Communications, Inc.

Shop Tech Products at Amazon