Microsoft Licensing Changes: Greedy and Monopolistic?

Much already has been written about the changes Microsoft announced to its licensing and support policies for virtualized application workloads.  In case you missed it, Gartner has a pretty brief synopsis to get you up to speed.  If you'd like a more comprehensive explanation, check out the Windows Virtualization Team Blog.

I don't want to rehash all the analyses or simply mimic what's already been written, so here's a rundown of the general consensus:

• Hooray!  The changes are long overdue and a step in the right direction--but more changes are needed (i.e., more flexible licensing for virtualized Windows Server workloads). 
• The changes may equate to big saving for some larger organizations while bringing others, who have simply ignored the restrictions, into compliance.  SMBs without volume licensing agreements are somewhat left out of the mix.  Chris Wolf explains this nicely.
• The changes conveniently were announced after the launch of Hyper-V--with System Center Virtual Machine Manger 2008 around the corner--and give Microsoft a competitive advantage over other virtualization vendors.

I largely agree with the consensus.  Companies are realizing great benefits from virtualization; however, licensing has remained an obstacle for a truly legit dynamic data center.  MS is pushing Windows Server Data Center edition for server virtualization, but more flexibility is still needed. 

As to the last point, I agree that the timing of the changes definitely is deliberate and gives MS a competitive advantage.  Is that wrong on Microsoft's part?  Surely, it would've been nice if, a while ago, MS had conceded some future competitive advantages by adjusting in its licensing to benefit customers who already have adopted virtualization.  However, is it fair to expect MS to open the floodgates on virtualization before releasing its own competitive product?  Why should every other virtualization vendor but MS stand to gain from its own licensing model?

Yes, a company should do what's right for the customer, but it also should do what's right for itself as a for-profit entity.  Crippling its own virtualization product before its release wouldn't have been a wise business move and probably would've pissed off investors--not to mention all the MS employees who have been hard at work on Hyper-V and SCVMM 08.  That said, now that Hyper-V is out, I'm sure there will be broader changes in its licensing policies.  Will MS maintain a competitive advantage?  Probably.  But I'm guessing the advantage primarily will be around cost savings due to Hyper-V essentially being included with Windows Server 2008.

Furthermore, it's easy to sit back and criticize MS for not doing enough.  But as an employee of a Microsoft ISV that makes the bulk of its revenue on licensing, I can tell you that licensing is a complicated beast.  First off, it's a legal contract, which in itself makes it complicated and difficult to quickly change.  Changes have to be fully vetted out and reviewed by the legal team.  Second, as a source of revenue, a company has to find the right balance of maintaining healthy licensing profits while providing value to customers--that's not always easy to do.  Thirdly, changes in licensing can have huge implications.  A small licensing change can have a negative impact on one of the company's other products.  We can see this in MS's case where its licensing changes are making its VAR and OEM licenses less attractive for SMBs who are close to qualifying for volume licensing agreements.  Lastly, customers are creative; they'll implement your products in ways you could never imagine.  In the days of 1:1 software-to-server ratios, things were simpler.  But with virtualization, server and application workloads can potentially span multiple servers across multiple data centers and DR sites.  Think of the impact that has on technical support.

I think the licensing changes show that MS is adapting with the industry.  Furthermore, it's putting all the right pieces in place.  It's revised its support policy to officially support 41 products running on virtualized servers.  It also started a Server Virtualization Validation Program (SVVP) to certify and support its products running on other virtualization platforms, such as Citrix XenServer, Novel SUSE Linux, Sun xVM and Virtual Iron.  VMware was late to the dance, but finally signed up as well. 

So, are the changes the be-all-end-all licensing model we all want?  No, but they show that MS is hearing our concerns.  Let's give credit where it's due and exercise some patience--just a little--as we continue to push for further changes.

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