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New Windows licensing simplifies server virtualization

In a radical shift that may spur the adoption of emerging virtualization technology, Microsoft is moving away from licensing per instance of Windows on a physical server, at least for its premium server editions.

Microsoft today announced licensing changes that will make it more affordable for many IT shops to run virtual servers on several premium products.

The changes are an important step toward eliminating confusion associated with virtual server licensing. The end result may be that it drives IT managers to press for faster roll out of this emerging technology.

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Microsoft said that for Windows Server 2003 R2 Enterprise Edition, which is due out shortly, customers can run up to four virtual instances on one physical server at no additional cost. For the Longhorn Datacenter Edition, customers can run an unlimited number of virtual instances on one physical server. The changes go into effect on December 1, 2005.

The company also said that customers that use products that are licensed per processor, which include SQL Server 2005, BizTalk Server and Internet Security & Acceleration Server, will now only pay for the number of virtual processors being used, not physical processors.

Customers across the board have been confused about how to license software in a virtualized environment. "Do you license the hardware or the software?" said Roger Wilding, a senior technical engineer at CNF, a Palo Alto, Calif.-based freight company.

"This will help us concentrate on our server infrastructure instead of the legalese of licensing," Wilding said. "And I can see this driving more interest in virtualization for disaster recovery and maybe even in the data center edition of Windows."

Experts say Microsoft's decision is important for several reasons. Companies are using products like ESX or GSX from VMWare Inc., to experiment with virtual instances running on servers. They've had to do so by applying old licensing models – which is to say, one per physical box.

When you apply this model to the world of virtualized software it gets real confusing to know what you need to buy, said Alvin Park, an analyst at Gartner Inc., the Stamford, Conn.-based consulting firm. "How many copies of the OS do I need?

"So it's good that Microsoft is stepping to the forefront to announce its position on virtual licensing," he added.

Next to watch will be the reaction of the market. Last October, Microsoft made a similar bold change in its licensing policy by breaking with the software industry, saying it will treat multi-core processors as single units when counting licenses.

Oracle Corp. and IBM took a different position. During the following year, both companies had made concessions. But this technology is different, Park said.

"The main thing to understand is that changes in hardware and software technology will drive changes in licensing over the next two and three years," he said.

Microsoft said it will also be developing virtualization models for its System Center technologies. Customers with a management pack for Microsoft Operation Manager, for example, will be able to manage a virtual machine in the same way they manage a physical machine.

The new licensing will resolve confusion about how to license MOM server and the agent that manages the server. Today, it's unclear if you have to buy a MOM agent for every virtual machine or every physical machine, or both. Under the new model, customers will only have to buy for the one physical machine and not one per virtual environment.

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