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How to License Windows VMs in a Non Microsoft Virtual Environment

Last week Microsoft made licensing changes that are beneficial for companies running applications in a virtual environment. Many articles and blog posts were published hailing the policy explained in the Microsoft Application Licensing Mobility Brief. However, as I explained in my post New Microsoft Application Mobility Brief does not cover the Windows Operating System, the new policy almost seems incomplete if you do not use Microsoft’s server operating system (OS) to host your virtual machines (VMs). The brief is easy to understand for scenarios where Hyper-V, Microsoft Virtual Server, or VMware Server are running on Server 2008, but to me it’s still confusing when a non Microsoft, bare metal hypervisor is installed instead. So, since it’s safe to say that Windows is by far the most widely used operating system in VMs today how should IT departments license Windows guests if a host is running VMware ESXi/ESX 3.5 or Citrix XenServer for example? The best choice may surprise you.

For that answer, Microsoft also updated its document titled Licensing Microsoft Server Products in Virtual Environments. This document not only explains the details of how many virtual instances of the various editions of Windows Server can be run on a single Windows host, but also provides an explanation of how to license processor based products like SQL Server when the number of combined virtual CPUs exceeds the physical. The 23 page document is a must read for virtual administrators in order to make sure they meet Microsoft licensing requirements, but my most surprising take away was that the best Windows OS to use when not using Microsoft to host a virtual environment is probably the least found license actually in use.

Believe it or not, Windows Server 2008 Datacenter Edition makes the most sense for large virtual environments regardless of the host OS. To illustrate why I used the Microsoft Virtualization Calculator to explore a 100 VM example. The results are displayed in the screenshot below.

Since Windows 2008 Server Datacenter Edition is licensed by the processor each row of the calculator represents multiple potential host scenarios for the 100 VMs. I am just using the results of each row independently and ignoring the totals row at the bottom. Click the image for a larger version.

As you can see the least number of licenses required and the resulting cost of licenses is the lowest in all scenarios for the Datacenter version. Since the Windows Server Datacenter Edition allows both a license for the physical hardware and then an unlimited number of VMs can run on that hardware, the server is properly licensed even if using VMware’s or Citrix’s bare metal installed products. Using Datacenter edition licensing along with the new application licensing announced in the Application Licensing Mobility Brief therefore also properly covers both the applications and the VM OS when migrating the guest between virtualization hosts. Datacenter Edition also covers the licensing of guests running previous versions like Windows Server 2003 and 2000. Unfortunately Microsoft still restricts the server OS migration to only once every 90 days, however.

Bottom line is that if you have consolidated your Windows Server infrastructure to non Microsoft solutions like VMware or Citrix, it makes sense to switch your licensing to Windows Server 2008 Datacenter Edition both for savings and compliance reasons.

Another interesting conclusion from this exercise is that scaling out with many smaller host servers (less CPUs) results in less licensing costs than scaling up with fewer, larger hardware platforms (more CPUs).

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  • Rich,

    Are those prices accurate? I simple google search puts datacenter at about 7k. That would change your financial calculation considerably.

    CARLO.
  • Carlo,

    Thanks for pointing this out, and I have to admit that I did not even check. I assumed Microsoft is populating it's Virtualization Calculator with correct pricing! I'll double check now.
  • Followup from my last comment and to Carlo's comment:

    The MS Calculator has the following Disclaimer about the prices used:

    The software will show prices in US Dollars or in the currency you select from the list provided and the prices you input. The default prices for the Microsoft server product(s) you select represent an estimated retail price on March 1, 2007 for Open Business Agreements. The prices shown do not include any applicable taxes. Any amounts should not be considered as a commercial proposal or offer from Microsoft. Microsoft provides this material solely for informational purposes and actual prices and payment terms may vary.
  • Great news for high density virtualization environments.. not so great news for old school "scale out" environments. For my organization it means that we can deliver software savings for the first time as part of our virtualization model.

    I think the day this was announced I heard the collective "DOH!" of every company that deployed their virtualization platform on low density servers.

    One thing I noticed when comparing our corporate pricing to "street" pricing, and selected reseller pricing - is that they tend to both discounted by the same percentage. So why the numbers may end up different, you will still have a consistent percentage of savings.
  • clicked Post on that one by accident it should have ended :

    One thing I noticed when comparing our corporate pricing to “street” pricing, and selected reseller pricing - is that they tend to all be discounted by the same percentage. So while the numbers may end up different, you will still have a consistent percentage of savings.
  • Jason,

    Thanks for confirming the concept of this post with real world prices!
  • Scott
    Another point to note is that licensing is done by socket, not by core. So it makes sense, from a liensing perpective, to buy hosts with multiple cores.
  • Thanks for the link Scott!
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