Common Windows VM Virtualisation Licensing Mistakes

I am not a licensing expert (and hence my lawyer says you should consult a real one for your requirements), but I do work with a team of them, and every day I learn something.  Over the past few months, I’ve had a lot of conversations about virtualisation (XenServer, Hyper-V, and VMware) and licensing with various users/implementers of the technology.  And I’m finding that two mistakes are being commonly made … and putting those organisations into an illegal situation.

Let’s get to the first one … and it’s one that is common in VMware houses and in organisations that have P2V’d.

Using Windows Server Standard Edition to License Migrating VMs on a Virtual Cluster

I am assuming that you already know that you cannot legally reuse a P2V’d OEM license because that license is tied to the tin it was originally installed on or bought with.  That’s why it was so cheap.

A lot of organisations are licensing their virtual machines with Windows Server Standard, one at a time.  It’s fine to install that edition of Windows Server on a VM.  And there is no issue with using it … as long as that virtual machine does not move from physical host to physical host more than once every 90 days.  I also believe that there is a geographic distance limitation on legally moving that VM (and that one depends on what region you are in AFAIK).  In other words, if you build a virtualised cluster and are VMotion-ing or Live Migrating VMs (each licensed with individual copies of Windows Server Standard) around (manually, PRO, DRS) more than once every 90 days then you are breaking the licensing rules of Windows Server Standard edition and are subject to punishment.

A really common instance of this mistake is a VMware house.  They don’t realise or haven’t been educated by their VMware reseller/implementer about correct (and cheaper in dense environments!) Windows licensing in a virtualised environment.  The implementer either mistakenly sees it as irrelevant in VMware-world or is just plain uneducated.

Here’s the truth: ever since 2004 or 2005 (I can’t remember when and am too lazy to google it) we can license Windows as follows in a virtualised environment:

  • Windows Server Standard: Assign 1 license to the host (which may be used for  Hyper-V or not used for Xen or VMware) and get 1 free license for a VM on that host.
  • Windows Server Enterprise: Assign 1 license to the host (same as Standard) and get up to 4 free licenses (with downgrade rights) for VMs on that host.
  • Windows Server Datacenter: Assign 2 (minimum) per proc (socket, not core) licenses to the host and get unlimited free licenses (with downgrade rights) for VMs on that host.

It feels silly that I’m rehashing this.  This should be common knowledge, just like that you need to insert a power cable in a computer to start it up.  But it just does not seem all that common.

Have you made this “licensing with individual copies of Windows Server Standard” mistake?  Think you’ll get away with it?  Hah!  Your Microsoft reseller has records, their distributor(s) have records, and Microsoft has records.  And those records get looked at every quarter or half year.  It’s easy to see who has what, and these days it is assumed that virtualisation is being used.  For example, if one looks at a customer’s records and I see 40 copies of Windows Server Standard, they may assume that Windows Server Standard has been deployed on a reasonably sized virtualisation farm and that DRS/VMotion/Live Migration is enabled.  That customer is possibly illegally using those licenses and their name is added to the audit list of someone like the Business Software Alliance (BSA).

Under Licensing a Virtualisation Cluster with Windows Server Enterprise

This one is common in small/medium companies.  A customer wants/deploys a virtualisation cluster (Xen, VMware or Hyper-V) with two hosts and between 5-8 virtual machines.  The virtualisation cluster will be active-active and virtual machines will be balanced across both hosts.


Each host is licensed with Windows Server Enterprise edition.  That provides up to 4 free copies of Windows Server for VMs running on those hosts.  Sweet; everything is licensed pretty economically because it works out cheaper than buying lots of copies of Standard edition, even if using XenServer or VMware for the hosts.  It’s an active-active cluster.  So from time to time VMs might move around for performance load balancing (DRS or PRO).  That might mean there could be 5 VMs on one host and 3 on the other.  Or there could be a host failure/maintenance window and that would mean host A could have 8 VMs and host B would have 0.


Remember that Windows Server Enterprise gives you up to 4 free licenses for VMs on that host the license is assigned to.  In this case, 1 license is assigned to Host A and 1 license is assigned to host B.  This customer is now illegally licensed because they have 8 VMs on Host A running Windows Server, but are only covered for 4.  It doesn’t matter if it’s a temporary thing.  It is illegal.  And this is quite common.

The correct way to license this is to either:

  1. Purchase 2 copies of Windows Server Enterprise for each host allowing up to 8 VMs per host for those DRS/PRO/failover situations.  Remember that each host will be legally limited to a maximum 8 VMs now, even in emergencies.
  2. Purchase Windows Server Datacenter per processor (min 2 per host) per host allowing unlimited VMs per host, thus making it the most flexible option.


You need to understand how Standard/Enterprise/Datacenter licensing works in virtualisation, just like you need to know that you have to buy a copy of Office for every one you install.  Fro each deployment, you need to understand:

a) Will there be VMotion/Live Migration/DRS/Dynamic Optimization/Power Optimisation or whatever where the VMs will move around more than once every 90 days?

b) If you license VMs at the host level with Enterprise, will the number of VMs ever exceed the licensed number for that host, even if just for a very short period of time?

If you are at all confused, then call a real licensing expert, and not just your virtualisation reseller/implementer.

I know VMware marketing are reading this blog and try to misquote it or make smart comments here from time to time.  Everything here applies to the legal licensing of VMs, no matter what virtualisation is used.  In fact, license your host with Enterprise or Datacenter (and getting licensing for your VMs) and a fully featured Hyper-V is just a tick box and 2 reboots away, saving you on that ever icreasing vTax.  So take that, stuff it in your pipe, and smoke it Smile

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MS Partner Event: Server Licensing in a Virtual Environment

I’m at a MS partner briefing day in Dublin.  The focus is on licensing in a virtualised environment.  I’ve spent most of the last 3 years in a hosting environment with SPLA licensing.  This will give me an opportunity to start getting back in touch with volume licensing.

  • Good News: we got key shaped 8GB USB sticks with the Hyper-V logo Smile
  • Bad News: Sales and marketing are coming in to talk to us Sad smile  I guess we have to take the bad with the good Winking smile

Ideal Process

  1. Technical expert assesses the infrastructure.
  2. Technical expert designs the virtualisation solution.
  3. Licensing specialist prices the requirements and chooses the best licensing.


  • Virtual Machine: encapsulated operating environment
  • Instance of software: Installed software, ready to execute.  On a physical hard disk or VHD.  On a server or copied to a SAN.
  • Processor: Socket, physical processor
  • Core: logical processor contained within a physical processor.  For example, 4 cores in a quad core processor.
  • OSE: Operating System Environment.
  • POSE: Physical operating system environment, installed on a physical server.
  • VOSE: Virtual operating system environment.


  • You only have to license running instances.  Powered down VMs do not need to be licensed.
  • This guy is saying that OEM licensing with Software Assurance is not tied to the hardware.  I guess I’ll have to take his word for that …. but I’d be sure to verify with a LAR beforehand!
  • Live migration: you can move a VM between hosts as long as the host is adequately licensed.  Exception: application mobility on server farms.  >90 days movement of licenses. (no details given).
  • CALs need to be bought for VOSEs.  Usually don’t need CALs for the POSE unless the POSE is providing direct services to users, e.g. you are silly and make your Hyper-V host into a file server.

Licensing Applications Per CPU

In the standard editions, you license the CPU’s of the OSE.  For example, in a VOSE you count the vCPUs.  In a POSE, you count the pCPUs.

In the Enterprise/Datacenter installations, you should license the host pCPUs.  There are benefits that cover more than one VOSE.  Enterprise usually covers 4 VOSEs (SQL), and DataCenter (if all pCPU’s are licensed with a minimum of 2) covers all VOSEs.

Simple VS Flexibility

We want simple licensing.  MS is claiming the the dynamic nature of virtualisation requires flexibility and this is an opposing force to simplicity.


  • Standard: lest flexible
  • Enterprise: flexible but limited
  • Datacenter: flexible and unlimited

SQL Licensing

God only knows!  The MS folks in the room cannot agree.  Ask your LAR and your local MS office licensing specialists.  The topic of 2008 rights (Enterprise covered all VOSEs) vs 2008 R3 rights (Enterprise covers 4 VOSEs) is debated.  One side says that 2008 rights have ended as of the release of 2008 R2.  The other side says they remain as long as you licensed SQL 2008 prior to the 2008 R2 release with per processor licensing or you bought instances with maintained Software Assurance.  There’s no firm answer so we break for lunch.

OK, there is a discount process.  You can license per processor based on virtual CPU, or physical CPU.  For example, if you have 1 vCPU in a VM on a host with quad core processors then you can buy 1 vCPU license.  If you have 4 vCPUs in a VM on a host with quad core processors then –> that VM runs on 1 pCPU so you can buy 1 per processor license for the pCPU.  If you have 2 * VM’s with 4 * vCPUs on a host with a single quad core processor then you buy 2 per processor licenses –> each VM runs on a single pCPU and you must license each installtion (1 pCPU * 2 VMs = 2 per processor licenses).

If licensing per POSE (host) then you must license each possible host that may license your SQL VM’s.  So, you could use Failover Clustering’s preferred hosts option for your SQL VM’s and set up a few preferred hosts in a cluster, and license those hosts.  And remember to take advantage of the CPU discount process.


You can freely reassign a license within a server farm.  Microsoft has a time zone definition of a server farm, e.g. 3 hours for North America, and 5.5 hours for Europe and the Middle East.

I’m not doing the std, ent, datacenter stuff because it’s done to death.

Most Common Mistakes

  • Virtualising more than 4 VM’s when using Enterprise Server edition
  • Under licensing when using Live Migration or VMotion
  • Under licensing of server application versions, e.g. SQL Standard instead of SQL Enterprise, for hosts when using Live Migration or VMotion
  • Selling OEM/FPP to customers who want live migration …. they either need volume licensing (with/without Software Assurance) or they should have OEM licensing with Software Assurance.

This is where the speaker warns us to never trust someone who claims to fully understand MS licensing rules.  Always qualify the answer by saying that you need to verify it.


If you have non-SA, legacy or thin clients, then you can use the VDA license for VDI.  If you have SA then your Enterprise licensing entitles you to 4 VM’s per licensed desktop machine and place those VM’s on a virtualisation host.

The VDI standard suite includes a bunch of management systems (SCVMM, SCOM, SCCM, and MDOP) and an RDS license for delivering user access to the VMs.  The VDI enterprise suite extends this by offering unrestricted RDS licensing to allow the user to access both VDI and terminal servers.  You also get App-V for RDS.


If you are running things like SQL, then you may need to consider live migration or VMotion.  There was a real-world example based on VMware.  24 possible hosts (4 CPUs each), 295 VMs and 36 of those running SQL.  How do you license?  For Server, the best scenario is to buy 96 * Datecenter edition.  For SQL, the actual solution (MS, customer, lawyers, etc involved) was to create a cluster of 4 hosts.  The SQL cluster of 4 hosts was licensed with SQL Datacenter edition.  That limited costs and maximised compliance.


That was an informative session.  The presenter did a good job.  He was accepting of being challenged and seemed to enjoy the 2-way conversation that we had going on.  If you are a partner and get an invite for this type of session, register and go in.  I think you’ll learn something.  For me, the day flew by, and that’s always a good sign.  I can’t say I understood everything and will retain it all.  I think that’s just the nature of this EU treaty-like complexity.

It seems to me that MS licensing for virtualised environments conflicts directly with the concepts of a dynamic data centre or private cloud computing.  For example, SCVMM 2012 gives us elasticity.  SCVMM SSP 2.0 gives us complete self-service.  System Center makes it possible to automatically deploy VMs based on user demand.  IT lose control of licensing that’s deployed in the private cloud because we’re handing over a lot of that control to the business.  What’s to stop the owner of a dozen VMs from deploying SQL, BizTalk, and so on, especially if we are doing cross charging which assumes they have an IT budget to spend?

Microsoft licensing rules assume complete control and oversight.  We don’t have that!  That was tough in the physical world; it’s impossible in the virtual world.  We might deploy VMs onto the “non-SQL” Hyper-V or vSphere cluster but the owners of those VMs can easily go and install SQL or something else on there that requires per-host licensing (for cost savings).  This pushes you back to per-VM licensing and you lose those cost savings.

I think MS licensing needs to think long and hard about this.  The private cloud is about to take off.  We need things to be simplified, which they are not.  On the contrary, I think virtualised licensing (on any of the hypervisors) is more complicated than ever, considering the dynamic nature of the data centre which is made possible by the great tools made by the likes of Microsoft, VMware, and Citrix.

On the positive side, if you understand this stuff, and put it to work, you can really save a lot of money in a virtualised environment.  The challenge is that you have to maintain some very tight controls.  It’s made me reconsider how I would look at designing Hyper-V/vSphere clusters.

Windows Server 2008 R2 Licensing Overview

“The Windows Server 2008 R2 licensing guide provides an in-depth overview of the Windows Server 2008 R2 core product offerings, including product names, available sales channels, licensing models, and number of running instances allowed per license in physical and virtual operating system environments (POSEs and VOSEs)”.

Microsoft Launches Initiative to Support Innovation For Start-Ups and Entrepreneurs

Last week, Microsoft launched a program called BizSpark to help small businesses launch an online presence.  Through this program, qualifying small start-up businesses will qualify for almost free MSDN accounts (including development software), PSS support and production licenses for server, SQL, etc.  They will need to be sponsored by a BizSpark partner.  Once in the program, the start-up can host their solution with a BizSpark hosting partner.

Volume License Media Shipment Changes

If you have a Microsoft Enterprise Agreement or a Select Volume License agreement then you will want to read this PowerPoint.  It details changes to Microsoft’s media shipping policy:

  • "Beginning September 1, 2007 Microsoft Enterprise Agreement and Select Agreement Volume License customers worldwide with active media subscriptions will receive monthly product subscription kits of the most widely-used Microsoft products.
  • Updates of all other products will be available either via download from the Microsoft Volume Licensing Services website or by purchasing media (CDs/DVDs) from a Microsoft Reseller.
  • This change will reduce the quantity of media in shipments to create a better customer experience".

Basically, everything they produce media for, you will get in the kit.  You only have to license it (according to your license program) to use it.  No more waiting around for the media to arrive in the post after your already lengthy internal purchasing process.