Microsoft Windows Server 2008 licensing for virtualization

Microsoft, as ever, has created a Gordian knot in its licensing schemes for Windows Server 2008. It's always been difficult to understand, with factors like Client Access Licenses and per-processor schemes. But as virtualization has become more popular, and Microsoft has added virtualized instance rights to its Windows licenses, the complexity of Windows Server licensing has been multiplied. In this tip, I'll distill how these licenses work and point out the best bang for the buck depending on what your virtual machines look like and how many you're running.

There are several key bits to understand when it comes to Microsoft virtualization licensing:

• First, and probably most importantly, Microsoft doesn't care which virtualization platform you use -- at least from a licensing standpoint. Microsoft refers to the process of assigning Windows licenses to machines. You could use Hyper-V on these machines and use Windows Server as your host OS, but you could just as easily assign a license to a machine running Linux and VMware, and you still get your guest OS virtualization rights. The copy of the OS installed on the physical hardware is completely optional, and the right to run Windows Server 2008 in a guest VM is valid no matter which virtualization platform that VM uses.

• From a licensing point of view, using Windows Server 2008 Standard Edition is the least flexible SKU, compared with the Enterprise and Datacenter editions, when used for virtualization. There's a significant limitation: If you install a copy of Windows Server 2008 and assign a license to a physical machine, and intend to use the one free virtual machine instance (running instance, that is) that comes with that license, you can only use the copy of the OS installed on the physical hardware to manage the virtual machines present on that host. Of course, you can have multiple virtual machines stored on the physical hardware, but under the terms of the license, only a single VM can be running at any given time on a Windows Server 2008 Standard license -- and the copy of Windows Server installed on the host can't provide other infrastructure services to your network. It can only run Hyper-V or the virtual machine management system of your choice (VMware, Xen, etc.) In the end, you're paying about $1,000 -- the cost of the Standard license -- and you're getting one fully flexible machine from it.

• Windows Server 2008 Enterprise gives you four VMs per license, and those licenses are cumulative. So if you have a big iron box with lots of CPU, RAM and access to tons of storage, you can stack up Windows Server 2008 Enterprise licenses and gain rights to run more virtual machines concurrently. So if you need to run 12 virtual machines concurrently on one server, you can assign three Windows Server 2008 Enterprise licenses to one physical machine. Again, in this instance, the physical hardware's OS must only be used to manage the virtual machines and not to provide any other infrastructure-type services to your organization. The $4,000 cost of the Enterprise license roughly equates to four Standard licenses, so at this point it becomes easy to skip the Standard edition.

• OEM licenses can't be moved. If you buy your new hardware from Dell and it comes with a Windows Server 2008 license, that license is forever tied to that Dell machine -- not another Dell machine or an HP server you brought in without an OS to replace the Dell machine (even if it doesn't run anymore). The rule of thumb for OEM systems is if it's in the box, it's only for that box, and the license dies when the machine dies. There are a few exceptions when it comes to organizations with volume licensing rights wherein you can, for a few extra dollars, "buy up" the OEM license to a regular license that has full flexibility, but that is a rare exception.

• You need to plan up front how you will assign licenses. This is important because you can't reassign Windows Server licenses from physical host to physical host more than once every 90 days. So, four times a year, you can move around the licenses you already own. Obviously you can purchase new licenses and gain additional flexibility, but as your infrastructure and data center needs change, and as new hardware is purchased, you need to be aware of this licensing restriction.

  This really comes into play during maintenance windows. For example, if you're using VMware, then you might be using VMotion to migrate VMs while you patch, install new hardware or make repairs on the host machine. But suppose you are already at capacity in terms of the number of concurrent running instances on each of your VM hosts. When you move a VM over to another host, you'll be out of compliance from a licensing perspective. It's important to note that there is nothing technical in the software that prevents this, and Microsoft understands the importance and the associated requirements of periodic maintenance, so the licensing army isn't going to hunt you down for migrating a VM to an "overloaded" host for an hour or so. But a license is a license -- it's not Swiss cheese -- and such temporary solutions are not meant to be permanent. If you want more flexibility over the long term, choose the Enterprise edition of Windows Server 2008 and then only run three VMs concurrently, leaving you room for one more slot, or choose the Datacenter edition (more in a moment on that).

• Standard and Enterprise edition licensing costs are the same no matter the number of CPUs or cores in a machine. Whether you have a single processor, a dual-core processor, or a quad-processor eight-core machine, the licensing cost is the same for both Standard and Enterprise.

• Standard doesn't include clustering support. You need to go to Enterprise or Datacenter for that. But if you think about it, one Enterprise license runs around $4,000, so you can run four VMs for $1,000 each, which is about the cost of the Standard SKU. If clustering is important, the break-even point is at four VMs, in which case the clear choice is to go with the Enterprise SKU for more flexibility.

• The Datacenter edition is probably a better deal than you think, if virtualization is important to your organization. The up-front license cost is a little staggering at roughly $3,000 per processor chip, but don't discount it quite yet. Along with a Datacenter license comes unlimited rights to use concurrent VMs with that operating system installed -- no limits, hosting limitations, placement, license assignments or anything else. The only time the licensing cost would change is if the number of processors in the host machine were increased. Plus, with the Datacenter edition, you get support for more addressable memory -- something important in a host machine for highly-consolidated virtual machines.

With all of that in mind, here are my recommendations about where to spend your IT budget to remain in compliance with these licensing policies for the lowest cost.

• Unless virtualization is simply a convenience and not a core function of your business, do not choose the Standard edition SKU for your virtualization needs. It is inflexible, doesn't support clustering and really provides no advantages if you want to run four or more virtual machines on a consistent basis. Standard only makes sense if you need constant access to one or maybe two virtual machines. Once you start relying on three, buying up to Enterprise and its additional features and virtualization flexibility starts to make sense.

• If you are running four VMs consistently, choose an Enterprise edition SKU. That should be your minimum entry point. Consider stacking a license on your host to give you some breathing room to remain in compliance with the license if your VM host has more than two processors (if it doesn't, then consider a Datacenter license.)

• If your organization has grown to virtualize somewhere between five and eight machines and you depend on them consistently, a Datacenter license makes a lot of sense. For one, you can grow to a bigger machine and achieve a greater consolidation ratio because of the increased memory limits. Second, you have future-proofed your VM growth in the days ahead. You have unlimited Windows Server installation rights in virtual machines. You don't have the headaches of tracking licenses, you enable a bunch of scenarios with unlimited VM OS rights, and you've done so in a cost-effective way. It just makes sense.

Manage Windows Server license costs
At its core, virtualization technology will have a profound impact on Windows Server licensing -- affecting the role of VMs, their working state, the relationship between VMs and physical hosts, and so on. The situation can be complex. Microsoft's licensing really hasn't done much to clear up that complexity, but we do know with reasonable certainty that if virtualization is important to your business and a big part of your IT plans, Enterprise and Datacenter SKUs are the two editions on which you should base your efforts. And Datacenter may be a better bargain than you imagined.